NASCO Organizer's Handbook-2020 Edition (Compressed Book Layout)

NASCO Cooperative Organizer’s Handbook: Fourth Edition


Table of Contents:

Bringing New Housing Cooperatives to Life 9
Acknowledgments 10
Introduction 11
Cooperative Ideology 13

A Collective Vision 13
The Rochdale Principles 17
First Principle: Voluntary & Open Membership 18
Second Principle: Democratic Member Control 19
Third Principle: Member Economic Participation 19
Fourth Principle: Autonomy & Independence 19
Fifth Principle: Education, Training & Information 20
Sixth Principle: Cooperation Among Cooperatives 20
Seventh Principle: Concern for Community 20
How to Start a Co-op in Five Easy Steps 21
Step 1: Create a Shared Vision 21
Step 2: Develop Tangible Plans 22
Step 3: Create and Fund a Legal Entity 22
Step 4: Acquire a Property 23
Step 5: Begin Operating the New Co-op 23
Step 1: Creating a Shared Vision 25
Forming an Organizing Group 25
2

Creating a Vision 27
Educating the Group 31
Education About Cooperatives 31
Education About Property Management 32
Education about Housing Cooperatives 33
Working Together 34
Step 2: Develop Tangible Plans 37

Community Organizing 37
Promotion 38
Social events 39
Educational Events 40
Fundraising 41
Student Government 42
Student Organizations 43
How to Find and Get Technical Assistance 44
Build an Advisory Committee 45
NASCO Development Services 47
Cooperatives 49
Universities 50
Local Housing Organizations 51
Government Agencies 51
State and Provincial Housing Agencies 53
Step 3: Create and Fund a Legal Entity 54

What Is Incorporation? 54
Why Incorporate? 55


The Incorporation Process 57

Articles of Incorporation 58
Type 59
Name 59
Purposes 59
Location 60
Incorporators 60
Initial Board of Directors 60
Dissolution Clause 61
Filing & Fees 61
Bylaws 61
Membership 62
Board of Directors 63
Committees, Houses, and other Decision-making
Groups 65
Different Models for Housing Cooperatives 66
Membership styles 67
Equity Models 67
Market-Equity Co-ops 68
Limited-Equity Co-ops 68
Group-Equity Co-ops 69
Structure, Non-Profit Status and Tax-Exemption 71
Structuring your Coop for Tax-Exemption 72
Applying for and Receiving Tax-Exempt Status 73
The First Meetings 76
4

Corporate Governance 76
House Governance 78
Step 4: Acquire a Property 81

Housing & Real Estate Research 82
Why Research? 82
Market Research 83
Community Research 85
Research Local Government Resources 86
Building & Zoning Code Research 87
Neighborhood Research 88
Creating a Prospectus 90
Real Estate Agents 91
Property Strategy 1: Leasing Property 93
Leasing as a Step Towards Ownership 94
Leasing as A Development Model 96
Looking for Property to Lease 98
Preliminary Budgeting for Property Leasing 99
Negotiating with Landlords 99
University Leasing Options 102
Negotiation With Universities 104
Signing a Lease 107
Property Strategy 2: Purchasing & Developing Property 108
Looking for Property to Purchase 110
Examples of Housing Cooperative Building Structures
111
Structural Feasibility & Occupancy 116
Preliminary Budgeting for Property Purchasing 119


Development Budget (Sources and Uses of Funds) 121

Operating Budget (Cashflow) 124
Making an Offer and Negotiation 127
Inspection and Appraisal 130
Developing a Rehabilitation Plan 133
Financing the Project 135
Mortgage Financing 135
Subsidiary Financing 137
Member Investment 138
Movement Resources 140
Getting Loans 141
Loan Applications 142
Loan Evaluation 144
Closing the Deal 144
Other Property Acquisition Strategies 146
The NASCO Properties Option 146
New Construction 148
Relief in Tight Markets 149
Subsidies 151
Step 5: Begin Operating the New Co-op 153

Preparing for the Transition to Cooperative Management
153
Interim Management 155
Cooperative Management 158
Cooperative Management Plan 158
Member Participation 159
6

Staff Continuity 159
Financial Management 160
Standards for Co-op Finances 160
Keeping the Co-op Financially Accessible 161
Membership Management 164
Membership Program Purpose, Goals and Standards
164
Marketing & Recruitment Plan 164
Outreach Methods 165
Key Information for Prospective Members 166
Inclusivity in Recruitment 169
Targeting Recruitment 169
Fair Housing Considerations 170
Member Intake 171
Member Contracts 171
Member Share 172
Member Tracking 172
Member Departure 173
Member Education 173
Member Orientation 173
Member Support & Continuing Education 176
Maintenance Management 177
Repairs 177
Capital Improvements & Major Project Planning 178
Standards for habitation 179
Cooperative vs. House Management 180


House Management & Labor Systems 180

Fundamental Work 181
House Officers 182
Equity in Labor 185
Labor System Implementation 186
A Living Entity 187
The Future 189

Leadership Development 190
Development Culture 194
Movement Culture 197
Afterword 199
Appendix 200
A Brief History of North American Cooperatives 200
Student Cooperatives & NASCO 201
North American Students of Cooperation 206
NASCO Development Services 208
New Chapters & Features Planned for 5th Edition: 209
Bibliography 210

8

The Organizer’s Handbook:

Bringing New Housing
Cooperatives to Life

“It has been said that cooperativism is an
economic movement that uses education;
we can alter that definition, affirming that it
is an educational movement that uses
economic action.”
— Jose Maria Arizmendiarrieta, founder of the Mondragon
Cooperative Corporation


Acknowledgments
First published by NASCO in 1991 in response to an
overwhelming demand for information about creating new
housing cooperatives, the Organizer’s Handbook has been
revised into a more accessible and comprehensive format. It
is the product of years of work by many people. Writers for
the First Edition include Renee Ordeneaux, Danny Krouk,
and Mitch Hough; writers for the Second Edition include
Brian Nagorsky, Eric Guetschoff, and Phil Ashton. Also,
special thanks to James Canup and Ben Phillips for their
editorial and advisory role; the writer for the third edition
was Daniel Miller, with contributions from Jim Jones and
Tom Pierson; and the writers for the Fourth edition were
Brel Hutton-Okpalaeke and Hannah Tobin-Bloch.

First Edition: September 1991
Second Edition: June 1997
Third Edition: November 2008
Fourth Edition: March 2020

10

Introduction
If you’ve picked up this guide, you’re probably interested in
what steps you can take to make your housing co-op1
dreams come true. If you’re anything like those of us with
NASCO, the idea of building a co-op from the ground up is
as incredibly tantalizing as much as it is daunting. No
worries! This guide was created with the intention of
demystifying this process and answering as many of the
questions you have as possible. The Organizer’s Guide will
walk you through a series of things to be thinking about,
questions to ask yourself, resources to look through, and
dos and don’ts to follow as you begin this process.

The Organizer’s Handbook is designed to provide a
comprehensive guide to creating housing cooperatives in
local communities. It was created in response to the lack of
accessible “how-to” information on housing development.
By explaining the cooperative movement, campus
organizing, non-profit incorporation, financing, and housing
development, this resource demystifies a complex and
challenging project. Edition Four is more comprehensive
and up-to-date than ever, written with accessible language
and an encouraging tone.

1
Housing Cooperative: A corporation that, as a primary function,
owns and manages real estate, where membership in the cooperative is
granted by way of a housing share purchase in the cooperative.
Each housing shareholder is granted the right to occupy one housing
unit. Members, through their elected representatives, screen and select
who may live in the co-op, and set the terms of membership.


Housing cooperatives are a means of providing affordable

housing that incorporates participation into a non-profit
structure. They are often used by student communities or
activist communities attempting to fight rising housing costs
or deteriorating neighborhoods. Co-ops have provided
services on college campuses and in cities throughout North
America since the 19th Century. Many cooperatives that
were formed during the Great Depression still exist today.
By lowering the cost of housing, and democratizing its
ownership, cooperatives are an integral part of a grassroots
strategy for making college more accessible, keeping
central neighborhoods accessible to lower income
community members, and providing experiential education
on business or nonprofit management and community
activism.

With this in mind, we want to first acknowledge that a few
dozen pages is not nearly enough to be a comprehensive
guide. While our goal is to make this handbook as
accessible as possible, we recognize that getting a project
off its feet, especially a co-op, can be an extremely messy
process. This guide does not provide a foolproof method of
organizing a co-op, since such a method realistically does
not exist. We welcome any feedback you have on this
handbook--whether or not you’ve used the Organizer’s
Handbook to successfully start your own co-op. On that
note, we wish you well on your journey to build your own
co-op and look forward to hearing all about it.

Much has changed since 2008 when this guide was last
updated, and more still since its original edition in 1991. In
this version, we’ve revised the Handbook’s content to be
more accessible to a broader range of people. We’ve
12

focused on using less jargon, being more upfront about
what kind of time and energy commitment this process will
take, and directing you to helpful resources along the way.
Our hope is that you come away from this guide feeling
more confident that you know how to bring a new co-op to
life - or at least that you know where to look for those
answers.

And lastly, we would love to lend our hand as you get
started. NASCO Development Services and NASCO
Properties are designed specifically to help projects such as
yours get started and gain momentum. If you’re confused
about where to get started, need help brainstorming, or just
need advice anywhere throughout this process, drop us a
line!

Cooperative Ideology
A Collective Vision
The Rochdale Principles
A Collective Vision
Before diving into the details of how to organize a housing
cooperative, we must discuss why we do it. We must
understand the goals and values that define the housing
cooperative movement. Why do we “seek to achieve a
socially and financially responsible North American
cooperative economic sector for all people and
organizations interested in applying the principles and


2
practices of cooperation?” As an organizer, you must have
an answer to this. Your community members, other co-op
organizers, and future supporters will thank you.

Many people today associate co-ops with the intentional
communities3 and communes4 of the 60s and 70s. However,
the origins of cooperatives lie much farther back than the
60s, and cooperatives today differ from those of the past.
Communes seek to serve the needs and values of a specific
community. Co-ops are formal legal organizations that
adhere to specific principles of cooperation. They seek to
apply to communities in general. Contemporary organizers
of cooperative housing get their inspiration from a variety of
concerns. They see cooperatives as a powerful way to
address them.

Low-income people, young families, and students have little
control over their lives as tenants in the housing market.
Co-ops bring control and housing stability back. They return
decision-making and ownership to the collective hands of
the residents. This ensures that the co-op will continue to
serve the needs of its members. It also ensures livable
housing conditions and fair treatment as long as the co-op
exists.

2
The NASCO Family Vision statement: https://www.nasco.coop/mvp
3
Intentional Community: A residential community designed to foster
social cohesion and teamwork.
4
Commune: A group of people living together and sharing possessions
and responsibilities.
14

Coops make housing more affordable by taking the profit
motive out of housing. This gives students easier access to
higher education. Co-ops keep housing in gentrifying areas
affordable. They stabilize low-income communities. They
make life-skills, education and civic engagement available to
those without access. Community cooperatives5 create
strong ties to neighborhood associations and revitalization
programs. They support an ever-widening range of
demographics in their area. Student cooperatives6 offer a
crucial bridge between higher education and “real world”
experience. Co-op learning experiences often come
through training, workshops, and conferences. They also
come through the day-to-day management of the co-op.
Bookkeeping, maintenance, and community outreach are all
skills that co-op members can learn. Managing housing
collectively builds communities that focus on the needs of
members. Often, the cooperatives serve as community
gathering spaces that enrich the community. Co-ops foster
self-determination and offer most of the tools and support
needed to improve communities. These are things that
apartments could never do. They should be a part of every
city’s affordable housing plan.

Social movements7 reach beyond the bounds of any one
formal organization. Cooperatives are movement
organizations seeking to democratize the economy.
Members define cooperatives, so co-ops tend to address
5
Community Cooperative: A cooperative that is open to all community
members, i.e. not limited to students
6
Student Cooperative: A cooperative that is designed for college
students to live in.
7
Social Movement: a process of building collective strength to bring
forth social change.


issues that are important to their membership. The housing

co-op movement is in solidarity with many other
movements. These include movements for racial justice,
labor rights, environmental justice, indigenous rights, “rights
to the city,” building a solidarity economy, queer liberation,
and feminism, among others. Co-ops empower people to
raise their voices and push society toward collective
liberation from the bottom-up. This is a fundamental part of
any healthy democracy. Co-ops create spaces for discussion
about social identity, equity difference, and equality. Many
new cooperatives advocate sustainable living by using
alternative building methods. Others by being open to
public viewing in a way that single-households rarely are.
Many co-ops are started by people already involved in a
movement. Others arise independently to further the
interests of their members. Those usually realize that their
mission can be better fulfilled by working with other
cooperatives. In any case, the larger task of democratizing
the economy is such a massive task that no one co-op can
do it alone. It can only be achieved by working and growing
as a movement until the task is done.

The main obstacle to using cooperatives as a tool for
improving communities is education. Most lenders have
little experience with cooperatives. Thus, Co-ops often get
labeled “high risk” investments even when they can prove
that they are financially solid. This bottleneck has limited the
development of new cooperatives via conventional
financing. Cooperatives respond to this by using the
resources of the existing cooperative network.8. NASCO and
8
Cooperative Network: An association of co-ops, owners, universities,
governments, credit unions, and other community-based lenders linked
by a common interest in growing the co-op movement.
16

other housing co-op organizers work to educate lenders on
the co-op model. We advocate for student and community
group-equity housing cooperatives. There are many
examples of successful projects and partnerships. Many of
the lenders, officials, and community members in your area
may be unaware of how cooperatives work. They may be
unaware of how they can provide all that they do and still
prove to be sound financial investments. Together, we seek
to change that.

We at NASCO are aware that we cannot realize our vision
alone. We alone cannot produce affordable co-op housing
in every community on the continent. Now more than ever,
we must be ready to reach out to other cooperative sectors.
We must reach out to those seeking to revitalize community,
democracy, and education. We must partner with
universities, governments, and community organizations.
These partnerships can provide the resources we need to
construct new cooperative housing. Housing co-ops must
be part of a strategy for educational access and community
development. This is key to a brighter future.
The Rochdale Principles

Cooperation, economic and otherwise, is something that
comes naturally to people. Human economic cooperation is
perhaps older than that of competition. Cooperation is tied
into our definition of what builds society. The modern co-op
movement is generally attributed to a group of 28 textile
workers in England. They organized the Rochdale Society of


9
Equitable Pioneers in 1844. During the previous year, they
were fired and blacklisted after an unsuccessful weaver’s
strike. So, they pooled their resources and started a small
dry goods store to escape poverty.

The Rochdale Pioneers weren't the first co-op. But, they
codified their features and rules into the Rochdale Principles
of 184410. These principles strengthened the organization
and formed the basis of a growth-oriented movement. The
International Cooperative Alliance revised these principles
in 1995. The new Statement on Cooperative Identity, is the
basis of any cooperative.

These principles make several distinctions about
cooperation:
First Principle: Voluntary & Open Membership

Cooperatives are voluntary organizations. They are
open to anyone willing to take on the responsibilities
of membership. A co-op should not bar any potential
member from participating based on discriminatory
grounds. These include physical ability, race, gender,
sexual orientation, religious affiliation, etc.
9
Rochdale Society of Equitable Pioneers: The originators of the modern
cooperative movement who banded together to create a small
cooperative grocery.
10
Rochdale Principles: A set of seven principles that collectively
contribute to the ideology behind cooperatives
18

Second Principle: Democratic Member Control

Cooperatives are member-owned and controlled
businesses where all members have an equal say.
One member = one vote. Co-ops stand in contrast to
proprietary ownership, where a single owner holds
authority. They stand in contrast to "traditional"
shareholder ownership too. In that model, corporate
control comes from the size of one’s investment.
Instead, co-ops elect representatives who are
accountable to their membership. When all members
cannot be present, these representatives afford a
voice to all.
Third Principle: Member Economic Participation

One of the most well-known components of
cooperatives is that they are owned by their
members. Cooperatives serve their members, and
not the interests of those investing capital. Co-ops
establish limits on the return of investment and on
shareholdings. They allow profit-seeking investments,
but not at the expense of the members. Co-ops
encourage local control and investments by the
people who use the business.
Fourth Principle: Autonomy & Independence

Any agreements that a cooperative enters into will
serve the interests of the co-op. Any capital raised by
the co-op should serve democratic control of the
co-op and preserve its autonomy.


Fifth Principle: Education, Training & Information

Cooperatives help the members actively govern their
organization through education. This gives members
the tools to take meaningful control of the co-op.
Simply giving someone a vote on paper is not the
same as giving them the trust and control of the
cooperative. Through education and transparency,
the co-op can make each member’s vote
better-informed and more empowering.
Sixth Principle: Cooperation Among Cooperatives

Cooperatives work to help other cooperatives to
better serve their members. This occurs by buying
goods from other cooperatives and assisting
developing co-ops. This keeps the resources of
cooperatives inside the broader cooperative
community. Similarly, individual coops keep the
business they generate inside of their local
communities.
Seventh Principle: Concern for Community

Cooperatives do not exist just for the benefit of the
members. They exist to serve, strengthen, and
sustain local communities. Cooperatives are powerful
hubs for culture, mutual aid, education, and
organizing within communities.
20

How to Start a Co-op in Five Easy

Steps
There are many paths toward establishing a new community
and controlling your housing through cooperation, but
these are the key steps you will need to get started. For
more assistance with your particular project, we encourage
you to contact us via the "Start a Co-op" Form11 on the
NASCO website. Starting a new housing co-op for you and
your community usually takes 1 to 3 years. It takes a lot of
coordination, dedication, and a medium amount of pure
luck. You won’t get rich (and probably won’t get paid at all)
starting a co-op, but you will get the home you need and
establish a community that will live on for decades to come.
It’s not easy, but there is a lot of support out there and
NASCO is here to help!
Step 1: Create a Shared Vision

A housing co-op exists to meet the shared needs of its
members together when they could not do so separately.
The first step is to identify what needs you and your
community have that are not being well met by the currently
available housing. Do you need cheaper rent? More flexible
terms? Control of your space? Write down your vision for a
housing arrangement that meets the needs of your
community. Be bold and honest. The sky's the limit, but the
ground is where you build from. Share your vision and find
the people that want to be a part of it. Recruitment is not
11
NASCO “Start a Co-op” Intake Form:
https://www.nasco.coop/start-a-coop?reason=1


just about finding people who like your idea, but people
who are willing and able to participate in an egalitarian
team and to do the work of creating a new organization.
This section will walk you through how to come up with a
plan and then revisit and refine it as you grow your vision.
Step 2: Develop Tangible Plans

Once you’ve got the band together, it’s time to start making
tangible plans. Your plans will necessarily change and
evolve over time. You won’t have all the answers. Start
writing down plans to make a framework for figuring out
what is possible. Who can you lean on when you need help?
Make a list of what technical assistance providers you know
and how they can aid you in the development process.
What do you want your property to look like? How big, how
many units, what amenities, what location? Sketch it out.
When will you move-in? How long do people have to work
on this before they might move on to other projects or
locations? How long can people stay in their current
housing? How long will real estate opportunities last? How
much will it cost to buy/build/lease a property? How much
money and work will members need to contribute upfront
and per month? How will we pay for regular and expected
expenses? NASCO provides an excellent Budget Template
12
online!
12
NASCO’s Budget Template along with some helpful videos on how to
use it can be found at:
https://www.nasco.coop/resources/creating-housing-cooperative-develo
pment-budget-1-4-use-funds
22

Step 3: Create and Fund a Legal Entity

A legal entity (such as a non-profit corporation, cooperative
corporation, or LLC) gives you a legal and financial tool to
share an asset among many people. It makes the rights and
responsibilities of individual members explicit and legally
enforceable. And it can protect the members from
adversarial entities or individuals who may try to sue,
displace, or take-over the co-op. Forming your legal entity
allows you to open bank accounts, receive bills, purchase
property and take out loans in the name of the co-op. A
corporation is formed by filing a form with a state. It is often
as simple as filling out a form on a website, but you should
consult an attorney familiar with co-op law in your state
before submitting any documents. Pro Tip: Look for a legal
clinic at local law schools to see if they provide free services
for groups starting new co-ops or non-profits.

Step 4: Acquire a Property

There are several options for acquiring a property. Your
co-op can master lease a residential property, purchase an
existing property, or build/renovate a building to suit your
needs. Many co-ops start off by leasing their first property
then purchase a building later. There are a variety of
specialists you will probably need to hire (or ask to donate
services pro bono!) in order to navigate the legal and
financial process of purchasing or renovating a building, and
we’ll go through them here.


Step 5: Begin Operating the New Co-op

Once you’ve started a housing co-op, the journey is not
over yet! There is still work to be done to ensure that your
co-op runs smoothly. Recruiting other cooperators, deciding
house policy, electing housing officers, and assigning chores
are just some of the many tasks to work on once you’ve built
your co-op. This chapter will walk you through this usually
1-to-2-year process and help you ensure your co-op is ready
to thrive.
24

Step 1: Creating a Shared Vision

Forming a Core Organizing Group
Creating a Vision
Educating the group
Working Together

The first section of the Handbook addresses a host of
fascinating issues that will get the project on its feet and
moving forward. Recruiting new members, educating the
public, and building a strong core group are essential to a
healthy project.
Forming an Organizing Group

If you have a dream of starting a housing co-op, reach out
to everyone you can think of. After initial outreach, define a
core organizing group13 as separate from the supporting
group.14 Supporters are people that are friendly but cannot
dedicate themselves to the project. A core organizing group
actually does the organizing work. The core must be
dedicated and tightly networked. It will have to
“bottom-line” major goals and deadlines.

13
Organizing Group: The initial group of organizers brought together to
build a co-op from the ground up and entrusted with the success or
failure of the project.
14
Supporters Group: a group of people who lend assistance in whatever
way they can: moral, financial, physical, etc. They are not responsible for
the project and can be thought of as community members or volunteers.


An organizing group could be a couple folks who came up
with a great idea. Another could be a group of friends who
decide to embark on a project together. Groups can come
from the membership of existing co-ops. They can come
from student or community groups. However they join, a
core group of people dedicated to making the project a
success is essential.

The group should be large enough to be able to accomplish
the various sets of goals that will come up. It should be
small enough for everyone to know what everyone else is
working on, and how far along they are.

Do not expand the size of the core group just for the sake of
expansion or general enthusiasm. While large groups
provide extra labor, groups that are too large are difficult to
manage. The balance between being nimble enough to
make quick decisions but large enough to complete needed
tasks depends on the group. All members of the core group
must be willing to commit significant time and energy to
creating the cooperative.

If you feel more members are needed, consider the
following questions when recruiting. A good core group
member should have positive answers for all of these:

● What sort of experience does the potential member
have? Experience in cooperatives, housing, business,
governance, community activism, and maintenance
are all helpful.
26

● What other qualities or skills does the potential
member bring to the project?
● How would this member joining the core group
increase the chances of success?
● Is the potential member able to work on a team well?
● Have they shown a commitment to the project?
● Are they reliable?
● Does the core group need more participants to
achieve its development goals?

Far down the line, the co-op may need more people to
move into a house. It may prove useful to keep a database
or a list of names, phone numbers, email, and addresses, of
all those who have expressed support. This will make
staying in contact and new member recruitment easier.
Creating a Vision
An important starting point for organizing groups is a
discussion of what led them to work towards a cooperative
in the first place. Many cooperatives are conceived as
responses to pressing social and economic issues. Others
are started to fulfill more personal needs, or to provide
lifestyle alternatives. An important part of the development
process is understanding these issues. Determine how your
cooperative can respond to them. This prepares the
organizing group to persuade the many people you'll have
to talk to that your co-op deserves support.

Part of the process of creating a vision is defining the
organization’s goals and purposes. Early on, many groups
do not see the need to have this conversation. The
members of most organizing groups share common


assumptions that led them to start a co-op. However, this

should be one of the first discussions that a group has. The
work of creating a vision does not end after the first
discussion. Cooperatives' fundamental nature is one of
extensive and continued deliberations. Cooperatives that
have existed since the Great Depression still periodically
review their missions.

Here are some questions to think through as you begin your
visioning process:15

● What are you trying to achieve?
● Why is this important to you? Why do you need this?
● What is at stake for you if the project is not
successful?
● What are you willing to forgo or sacrifice to achieve
your goal?

Housing cooperatives without careful visioning can
reproduce systems of oppression found in society. A way to
prevent this is to establish your intentions early. Race,
culture, class, religion, spirituality, gender, sexual
orientation, and ability matter. Committing early to support
marginalized groups gives you a solid foundation.

Below is a list of discussion topics that may prove useful in
guiding a visioning discussion for a student or community
co-op.
15
Visioning Process: The process of thinking through your goals as you
begin a new project and considering any limitations on those goals.
28

● What is going on in the community now that makes a
cooperative seem desirable? In the 1930s, economic
woes and racism led students to create co-ops as
housing alternatives to the oppressive policies of
dorms. The student cooperatives of the 1960s were
born of the idealism and activism of the period. The
housing cooperatives of today emerge from a
combination of factors and interests. They seek
social, economic, and environmental justice,
accessibility, community, civic engagement, and
democracy.

● What are some of the issues that are alive in your
community or on your campus? Is there a housing
crisis? Are people displeased enough with local or
university housing to consider alternatives? Consider
issues in the community and imagine how a
cooperative could address them.

● What is your co-op's mission? What is the target
group that this mission will serve? How will a
cooperative benefit this group? Most communities
are composed of many social groupings and circles.
Will your cooperative target a specific population in
its focus, advertisements, and outreach? Be aware of
how the co-op environment you create affects who
wants to live at the co-op. Avoid limiting your impact
in the community by being needlessly exclusive.

● Where will the cooperative be located? Neighboring
most universities, you can find rundown


neighborhoods populated by students. Dilapidated

housing, absentee landlords, and community neglect
demarcate these areas. They are generally seen as
urban blight by non-students. This is usually not the
fault of the residents. The owners of those properties
profit from the rents of students. They have little
incentive to keep the properties in decent shape.
Increasingly, property speculators buy property in
poor neighborhoods and rent it to students at higher
rates, gentrifying whole areas.

● Will the cooperative occupy housing in a student
neighborhood? How will the co-op address the
problems of other low-income people in the
community? Student organizing groups must be
aware of how they affect the people outside of the
student community.

● Will the food system be organized on a collective or
individual basis? Or both? To what degree will the
members be involved in governance and operations?
How will the governance and management of the
organization work? Who will clean the toilets? If
possible, organizing groups should visit other student
cooperatives and discuss their operations. Internships
at existing cooperatives provide an excellent
opportunity to experience first-hand co-op
operations.

● How do the members envision the cooperative’s
operations? Co-op operations usually evolve out of a
process of trial and error. It is important for
30

organizers to take the time to envision the initial
policies and practices. Some best practices are
discussed in this handbook's section on operating a
new co-op.
Educating the Group

A commitment to education is necessary even for
experienced cooperators. It breathes life into the
cooperative structure and empowers members to take
control of the organization. There are three important areas
of education in creating a new housing cooperative. These
are cooperatives in general, property management, and the
specifics of housing co-ops.
Education About Cooperatives

Opportunities for education about cooperatives are a lot
more plentiful than you might think. In many cities in North
America there are cooperatives and experienced co-op
activists. The members of your organizing group may have a
shared vision of what their co-op will do for them, and what
their co-op “should be.” There are, however, many different
types of co-op. Each of them has developed interesting
democratic techniques for solving problems. They all
provide opportunities to learn from their examples. If you
are able, try to set up visits to other co-ops with your
organizing group. Visiting other co-ops gives a window into
how similar co-ops operate, and can open your eyes to
ideas you weren’t even considering.

Maybe a local food cooperative has an education program.
An agricultural cooperative manager could come lead a
discussion about the cooperative principles. You may also


find co-housing, utility co-ops, worker co-ops, or other types
of collective or co-op in your area. Any of these that are
willing to speak to your group about their experiences will
help inform your decision-making process. Think creatively,
and, once again, look for allies.
Education About Property Management

Property Management is another challenge altogether.
Development, rehabilitation, maintenance, financing, and
the real estate market seem to most like they are from
another world. Most community activists know very little
about property management. Thankfully, most communities
have plenty of resources available to organizing groups.
Many of these topics are accessible to novices and experts
alike through free workshops.

Proactive steps should be taken to empower your group in
this area. There may be real estate courses offered at the
local community college. There are often free workshops for
first-time homebuyers put on by the city. To learn more
about zoning and housing regulations, you can speak to a
realtor to get an overview. You can also meet with the staff
at the city planning department. Ask them questions about
how your co-op would need to go about finding the right
kind of property.

In most cases, the buildings your group looks at will need
some amount of work. Your members will almost certainly
need to either do this work or at least supervise and
coordinate it. To do this responsibly requires knowledge of
how the systems in the building work, and how to change or
improve them. Many hardware stores host free workshops
32

on building topics as a way of attracting customers. You can
visit these to become more aware of the sorts of issues
attached to the work you will want to do. There are also
many online resources to help you understand many types
of construction and renovation.

Education about Housing Cooperatives

You’re in luck! That’s what the rest of this handbook is all
about! It’s also the mission of NASCO to educate members
of the public about housing co-ops. They are an excellent
first step toward reaching the wider housing cooperative
movement.

Discussion is usually the best means for empowering
organizing groups. An effective educational format is to
make copies of one chapter of this Handbook, distribute
them to everyone in the group, read it, and discuss. This
process does not lead to mastery but gets groups thinking
and acting. Often, a group member already knows about
housing, finances, legal structures, or some other part of
organizing. They should share their knowledge with the
group through workshops or discussion. If no one in the
group is knowledgeable, find someone else that will
facilitate this.

There may be co-op alumni in the group, who can provide
valuable information. However, do not rely upon them as
the only source of knowledge. The annual NASCO Institute
and other regional conferences are opportunities to meet
cooperators, trade strategies, and inspire. Similarly to
visiting other cooperatives in general, visiting other housing


co-ops can open your eyes to many models of housing
co-op. On top of this, they are fun opportunities for
members to learn and bond. Most co-ops, in the spirit of
the movement, are quite willing to host guests overnight.
Out of respect, though, plans should be made in advance.
Working Together
Pay special attention to creating healthy group dynamics. A
healthy organizing group balances its two major
responsibilities: task and process. Task is the group's
responsibility to the project: it must assign jobs and ensure
that they happen on time. Process is the group's
responsibility to itself: it must support its members fairly and
seek to work together well. The many tasks your organizing
group will take on make up the majority of this handbook.
Before that, we must focus on process.

Establish a clear process of communication, evaluation, and
decision-making. Clarity is essential to organizing and
regular meetings create a good basis for this. At this point,
you probably will not have committed to a legal structure.
Take this opportunity and flexibility to try a few different
decision-making methods. These methods should strive to
dismantle social oppression within the group and beyond.
Regularly review strategies for the near future, purpose and
vision of the co-op, and progress of each member. Keeping
updated about these things prevents confusion and keeps
members on task. Take a few minutes out of each planning
session to let people talk about how they feel. Check in on
how things are working, and if people’s time and abilities
are being respected. Starting a co-op is an exciting process,
but without checking in, group members can start to feel
34

disrespected or burned-out. Find out where people feel like
they are gaining, rather than losing energy from the project.
Use this to encourage and support the group.

Recognize the identity differences within your organizing
group. Race, culture, class, religion, gender, sexual
orientation, and ability all impact your work. Work together
to create an anti-oppressive space in the co-op. Without
careful watch, systemic oppression can seep in and create
fissures within an organizing group. There are many ways a
co-op can educate itself on systems of oppression.
Members can lead workshops for the group or find outside
trainers. There is usually a wealth of resources near
universities and student organizations to get started.
Anti-oppression education improves group dynamics
dramatically if applied. Beyond this, it provides a framework
for building diverse membership and a stronger community.

Make time to get to know other organizing group members
on a personal basis. It is much easier to work with people if
meetings aren't the only way you know them. You don't
have to be best friends, but building personal relationships
helps you to see your fellow organizers as the complex
humans they are. Educational trips combine cooperative
learning with building a strong sense of community. In the
end, participation in a housing cooperative involves more
than just meetings. It is living, playing, making decisions,
doing chores, and managing an organization together.

A misconception about co-ops is that everyone involved
gets along. To some, that's what being a "cooperative"
means. In reality, there will be periods of intense


disagreement. Disagreement is not bad. In fact, it is

fundamental to good decision making! Handling
disagreements openly and honestly helps your group define
itself. Groupthink can be damaging to an organizing group.
If some group members feel they cannot say what’s on their
mind, you may overlook serious issues. Thus,
decision-making and the work quality will suffer. When more
serious problems than disagreements arise, the group
should address them swiftly. Seek restorative solutions that
meet everyone’s concerns.

This section is short, but vital. As you move into the many
tasks that you will have to do, keep reviewing whether
you're working well together. Ask yourself, "are we
considering our group's needs?" "Are we fairly dividing
tasks?" "Are we communicating well enough?" If not,
reevaluate your actions. Committing to balancing task and
process throughout the project will lead to a stronger
community and better results. The ability to work together
takes time, practice and effort. With good process, your
group may be able to start another co-op when you finish
this one!

36

Step 2: Develop Tangible Plans

Community Organizing
Technical Assistance
Community Organizing
After building an organizing group, seek to build community
interest in cooperative housing. Effective outreach consists
of building a positive presence in the community first. That
presence helps immensely when asking for support. Support
from the larger community gives a project a broader
resource base. This makes the project much more dynamic.
Community support becomes even more valuable when the
co-op tries to acquire property. Bringing community
members into the process as stakeholders adds a helpful
perspective. This also creates a real sense of civic
engagement for your members. Are there other people in
the community who are interested, or potentially interested
in cooperatives? Any effort you put into organizing or
outreach should be based on the needs that your co-op is
meant to fill. A student- or campus-based co-op will use
different tactics than a co-op for single parents. Affordable
community housing, or commercial/residential mixed-use16
co-ops will use different tactics still.
16
Commercial/Residential Mixed Use: Commercial use - land/units
zoned for commercial purposes with the intention of profit; Residential
use - land/units zoned for housing purposes; Mixed Use - land/unit


Promotion
Leafleting and postering are traditional means for
community organizers to get the word out. They are still
very effective for student co-op organizers. Creating a social
media presence is essential at this point as well. Remember
to reach out on multiple platforms - you can’t find everyone
on Facebook. Craigslist and other apartment listings are
other great ways to advertise spaces in your co-op once you
get rolling. They are also great to find people who are
interested in forms of support needed by the co-op. Other
online tools can include social network groups with
meetings and events.

Online organizing inserts a social and class bias into which
parts of the community get to hear about the project.
Organizers should make sure to use several channels of
communication to get the word out. Try creating
eye-catching flyers and posters to place in areas where
people congregate. Target places that serve the
communities that will be interested in your co-op. For
student groups, plaster campus kiosks with flyers. Talk up
your alternative housing to folks in the local dorms and at
student life events. Creating such materials can be a catalyst
for clarifying vision and purpose.

In any organizing situation, try to test the level of interest in
your project. You can certainly get enough people to work
as your core group, but will you need to plan on a core of
four people who will raise awareness in the public later? Or
do you have 20 people chomping at the bit to file papers
with the secretary of state next week? Host a dinner or a
38

forum on the topic and see what the intensity and amount
of interest look like. It may take a few tries before you find
the right venue, and the right way to communicate this, so
don’t get discouraged if you “throw a party and nobody
comes.”

Social events
Social events help publicize the organization widely. They
also allow you to identify those who can help the project
and how. Some attendees could be valuable to your
organizing group. Others may want to move into your
cooperative. Others still might help spread the word, even if
they don't become active participants. Consider anyone to
be a potential ally.

Have a sign-in sheet at all social events. Use it to create a
contact list. Try to record what brought people there as
well. Most people have some level of “email list burnout”.
Be careful to give them an idea of how communication will
be going around. Give them the option to unsubscribe, or
to only get very relevant updates. It is useful to find out how
many more years each person expects to be in the area.
Find out if they have any skills relating to cooperatives,
business, or housing. Involving community members by
hosting social events is fun and powerful outreach work. It is
an opportunity to dream and to motivate.

Use social events to distinguish the supporters from the
organizing group. Look for leaders. You will need them to
attend and work between business meetings. You will need
them to commit to bringing the cooperative to life. This is


not to say that anyone should be discouraged, but it is
important for movers and shakers to step forward.
Educational Events
Hosting educational events is a great way to do initial
outreach. Try to combine these with your efforts to recruit
organizers and build support for co-ops. Consider
coinciding with major local dates or dates in the cooperative
movement. (October is Co-op Month.) You can campaign to
educate the community about co-ops and local housing
issues. Conferences, workshops, and other one-day events
can focus on how co-ops respond to local housing needs.
Past organizing groups have hosted speakers. Some set up
public information booths. Others have held debates during
elections to talk about local housing issues. These events
introduce the concept of cooperative housing and publicize
your group's activities. They can motivate people to help
support your project and even seek to be future co-op
members. If successful, the campaign could segue into a
local ballot initiative!

A smaller scale educational event could be a workshop for a
more focused group. Skill-shares can focus on basics in
maintenance and renovation. They can help potential
members understand local housing and zoning laws. You
could hold an info session about some of the terms used in
real estate. You can usually find knowledgeable folks in your
area to speak on these issues. If not, members of the group
can break up this research and come back together to share
40

what they have learned. This is the each-one-teach-one17
method, a powerful teaching tool.
Fundraising
In the initial stages, organizing a cooperative doesn’t take
much money. However, calls, gas, and printing start to
add-up. It is often not realistic to expect individual members
to pay all these bills. To cover these, you'll have to start
fundraising. Fundraising can also help reduce the cost of
co-op education conferences and get more members of
your group to get helpful trainings. Your campaign should
take into account your group’s needs and abilities.

Film nights, bake sales, bottle drives and pledge campaigns
can help raise funds for the group. Educational and
community events can serve as outreach as well as
fundraisers. Getting other local co-ops to donate money is a
tried-and-true strategy. Research foundations, alumni
associations from existing co-ops, universities, and city
government programs. Chances are, your project fits
someone's funding profile.

Successful fundraisers combine traditional techniques with
creativity and innovation. In a university community, you
could campaign to raise student fees $1 per semester to
build an affordable housing development fund. In a
non-student community, similar suggestions could be made
17
Each-one-teach-one: A teaching method rooted in a slavery-era
African American Proverb. Enslaved people were often barred from
learning to read or write. Those that did made it their duty to teach
others. This led to the spread of literacy among the enslaved
population.


to local affordable housing advocacy groups or municipal

funds for housing. There you could seek to create a pool of
city money for cooperative or affordable housing. The fund
would start out small, but could support the organizers
during startup. (The co-op would have to live in rented
property to start.) After a few years, though, it could yield a
down payment large enough to buy a building. These funds
sometimes already exist, so be on the lookout for them.
Student Government
The student government is an excellent resource for campus
organizers trying to widen their outreach. Student
governments can offer organizational advice, help, and
encouragement. Often, they have literature designed to
help student groups organize. They will be able to provide
information about the benefits of becoming a Registered
Student Organization, or RSO. RSOs often get university
funding, printing access, meeting space, office space,
development help, advertising, and more. Registering also
shows the university that a group is committed to being a
part of the campus community.

Furthermore, the student government may become another
supporter of the effort. Even if it is in name only, having
their backing can encourage others who might have been
on the fence to support you. Some student governments
are active in the area of housing and tenants’ rights. They
may have housing committees or programs that can prove
useful.
42

Student Organizations
Are there groups on your campus interested in educational
accessibility?18 Keeping student housing affordable is not
always part of a university's accessibility strategy. However,
it is not uncommon to find groups that recognize that
affordable student housing helps keep students out of debt.

Social justice and students’ rights groups may also prove to
be helpful allies. The empowering and egalitarian values of
co-ops often align with the goals of social justice groups.
They may be willing to lend organizing support or help
fundraise for housing co-ops. Does the university have a
local student Public Interest Research Group19 (PIRG)?

Environmental groups will also often show support for
cooperatives. Cooperatives are much less resource intensive
than other forms of housing. Additionally, many co-ops
include sustainability programs. Is there an environmental
center?

Organizers who reach out to other groups often encounter a
lack of knowledge about cooperatives. Sometimes groups
don't believe that students can run their own housing
organizations. NASCO can help overcome this by providing
18
Educational Accessibility: The ability of people to receive an
education from an institution. This ability is often affected by race,
economic status, gender, etc.
19
Public Interest Research Group: PIRGs are federations of nonprofit
organizations that aim to bring about liberal political change.


literature about student co-ops for outreach. This literature

adds validity to the concept and helps build support.
How to Find and Get Technical Assistance

There are many resources available for new organizers both
local and statewide. These resources can help tackle the
technical aspects of cooperative development. Founders of
co-ops usually learn most of what they need to know during
the organizing process. However, you can save time and
frustration by knowing allies and seeking assistance. Talking
to people who regularly work with the topics you need to
master will be the best way for you to learn them. Real
estate, tenant law, zoning, and other professionals can help
build context for your co-op's project.

Technical assistance providers20 are powerful tools which
can benefit organizing groups. They offer legal and
development aid, business advice, and other assistance
connections. Some may offer meeting space, office space,
printing, and other resources.

Technical assistance providers exist for public benefit, but
they cannot work with everyone. To get their help, you must
first convince them that your group is active, serious, and
organized. Second, you must convince them that the project
will benefit from their help. Third, you must convince them
that it has a chance to succeed.

There is no comprehensive master list of co-op technical
20
Technical assistance provider: A person or organization that can
provide targeted support to an organization with a development need
in a particular arena.
44

assistance providers. NASCO has a limited database of
cooperatives and technical assistance organizations. Many
universities and colleges keep records of local non-profits.
You can check sites like www.idealist.org or
www.craigslist.org. There are some categories of provider
types that can help you narrow your search. Local housing
organizations, co-ops, government agencies, universities,
and neighborhood associations provide opportunities for
assistance. Delegate researching technical assistance
providers to a few people in the organizing group.

Ask each organization you contact if they can provide leads
to other resources. After compiling a list of potential allies,
try a few different kinds of outreach. Practice your “elevator
pitch”. In a minute or so, you should be able to explain your
main goal, how you plan to get there, and why a provider
can help get there.

Resourcefulness and persistence are key to finding
assistance. Many technical assistants you find won't be
familiar with housing co-ops. Furthermore, not everyone is
as excited about co-ops as you may be! Young organizers
often encounter prejudice based on their age or lack of
experience and resources. Don't be discouraged! Co-ops
are great and there should be more of them!
Build an Advisory Committee

A means of formalizing support from professionals and
community members is an Advisory Committee. An
Advisory Committee should not make decisions for the
co-op. It should merely advise members of best practices.
This way it will not affect the member-led nature of the
cooperative. Advisory Committee members should
understand the benefits of co-ops and have time and skills


to contribute. Advisors should support the group’s mission,

purpose, and methods, and they should be willing to
provide advice and technical skills for the cooperative.

An effective Advisory Committee might include any of the
following resource people:

● Fundraiser: to gather financial support from the
community.
● Community leader: to help build a base of support.
● Lawyer: to serve as a legal advisor.
● Architect: to do some drawings for changes to

potential buildings to purchase.
● Loan officer: to provide assistance in getting loans.
● University staff (if applicable): to serve as a link and

offer services.
● Co-op staff person: to serve as a point of reference

for committee members and provide advice and
encouragement to the organizers.
NASCO Development Services

NASCO Development Services21 is a technical assistance
provider that specializes in housing co-ops. They are a great
first stop for organizing groups who are just starting out.
NASCO Development Services provides free initial
21
NASCO Development Services can be contacted for initial consulting
at https://www.nasco.coop/development
46

consulting! This is invaluable to new organizers. Ask them
about your project's feasibility or next steps. They can often
steer you toward the resources you need. NASCO
Development Services is a small organization with limited
resources. Therefore, organizing groups should seek
assistance from others that can aid as well.

NASCO Development Services gives technical assistance
from start to finish for Active Projects.22 To become an
Active Project, the group needs to first state its
development plans. Most committed groups have excellent
potential to become successful projects. NASCO
Development Services staff can help you through the
entirety of creating your development plan.

The second step toward becoming an Active Project is to
sign a contract between your organizing group and NASCO
Development Services. It is approved by the cooperative’s
Board of Directors or membership and the NASCO
Development Services Board. If approved, your project will
have Active Project status. This gets your co-op professional
assistance all the way through.

The service agreement states each party's responsibilities.
During the project, NASCO Development Services provides
Active Projects administration. They seek financing, both
grants and loans. They negotiate and arrange purchase
and/or lease agreements. They provide start-up assistance.
After the project ends, They provide two years of follow-up
with the cooperative. They make sure that all the required
corporate filing is maintained. They check over the
22
NASCO Development Services Active Project: A status a core group
can attain by formally stating its intentions and development plans to
NASCO Development Services, and signing a contract for services


accounting. They provide trainings to board directors and

members.

The cooperative agrees to coordinate local efforts and
recruit members. They also agree to become and remain
members of both NASCO and NASCO Development
Services. NASCO Development Services is a movement
organization. Thus it asks the co-ops that it helps create to
support growth and assistance for future co-ops. NASCO
membership assures that the new co-op has education,
training, and consulting beyond the initial years. The
cooperative also agrees to commit to continuous expansion.
23
NASCO Development Services seeks to grow the co-op
movement. Cooperatives are valuable contributions to their
communities and their expansion is desirable. The more
co-ops, the better.

The agreement also describes how NASCO Development
Services is paid for its services. Typically they charge a
success fee that becomes part of the mortgage. This means
that the co-op only pays if NASCO Development Services
succeeds in getting financing for the co-op. This also means
that the co-op does not have to raise the funds up front.
Almost invariably, the amount of time and money that the
co-op saves by working with NASCO Development Services
pays for itself.
23
Continuous Expansion: When a cooperative commits to the mission of
continuing to grow as an organization as long as it is financially
sustainable. This contributes to the growth of the cooperative
movement.
48

Cooperatives
A comfortable place to start the local outreach process
might be with other cooperatives in the area. Note that local
food,24 book,25 agricultural26 or utility co-ops27 may not be
familiar with your style of housing co-op. Most of the
concerns about membership and governance will be very
similar for all types of co-ops. Particularly for development,
co-ops can be enthusiastic providers of information and
advice. Cooperatives may also offer their offices, meeting
space, business advice, or education resources.

Local housing cooperatives may be willing to play the role
of a “big sister co-op.” Co-ops could donate staff time to
help inspect potential properties. They could offer advice on
the local housing market, donate old tools and equipment,
and so on. You never know until you ask.

Existing student cooperatives often support organizing
groups. They can be invaluable sources of information and
encouragement. Many have a history of providing financing
for organizing groups. Even if they cannot provide financial
support, they often can use staff and other resources to help
get your project off the ground.
24
Food Co-op: A cooperative that operates as a grocery store that
serves member-owners by providing groceries often at a reduced cost.
25
Book Co-op: A cooperative that operates as a library in which
members have access to a wide variety of books.
26
Agricultural Co-op: A cooperative that is comprised of agricultural
producers.
27
Utility Co-op: A cooperative comprised of utility consumers who
collectively control a utility. Rural electric cooperatives are a textbook
example of this.


Universities
Universities can be valuable sources of assistance for
organizing groups attempting to start student or
campus-based co-ops. Expect administrators to not know
about student housing cooperatives. Prepare to explain the
concept. Have in mind what resources the university may be
able to provide to the group. Be willing to ask for these, and
ask if there are alternative forms of support. If appropriate,
NASCO can provide pamphlets or letters of support. These
help explain co-op housing and add legitimacy to your ask.
Universities often own buildings or land in the community or
on campus that could benefit a cooperative.

The housing office or student affairs office are good places
to begin communication. At the very least, ask the university
to add the cooperative to its list of recommended housing.
Doing so is a huge aid in member recruitment. The Housing
office should have information on rents, tenant-landlord law,
and available housing. These staff deal with community
housing and are familiar with the problems associated with
it. They may be sympathetic to your group’s cause.
Local Housing Organizations

Most cities in North America have at least one organization
whose mission is to develop non-profit or affordable
housing. Non-Profit development organizations, community
development corporations, and community land trusts all
have skilled staff who can answer questions and offer advice
in housing development. They may refer you to sources of
financing or lawyers who are willing to offer their services
free of cost. Many areas have a tenants’ union which works
on behalf of tenant rights. Tenants' unions point out bad
50

landlords, give information on landlord-tenant law, and track
local housing trends. These are great references when
making the case that you need a housing cooperative in
your area.
Government Agencies
Many city governments have housing or community
development programs. The Community Development
Department28 is a good place to start. They can let you
know what resources are available for cooperatives, and
what strings are attached. They may have information about
other local affordable housing providers. City governments
may be able to provide affordable housing grants or loans.
Some cities have para-municipal housing agencies29 or trust
funds which support housing development. The availability
of these programs varies.

Other city staff can provide advice on legal issues, such as
zoning and housing codes. They can let you know if the
group’s plans are allowed in certain neighborhoods. Ask
them about “multiple unrelated persons” living together,
“multi-family”, or “group residence”. These terms differ
from city to city, so carefully explain your plans to Zoning
staff. Many co-ops run into problems that could have been
avoided by taking this step. Most cities will have a way for
citizens to go and speak to city staff about their project's
28
Community Development Department: A governmental department
that could have a different name in your city. This usually focuses on
providing housing and community services.
29
Para-municipal Housing Agencies: These are public-private
partnerships between a municipality and investors, donors, and
developers. These agencies use the intersection of public and private
enterprise to develop housing.


specifics. These people are there to help you understand

what you need to do to meet city requirements and get to
your goal.

Most municipalities have a Planning Commission.30
Periodically, they analyze local issues and target municipal
resources to address them. A presentation to the Planning
Commission about cooperative housing can build political
support. Co-ops have a rare combination of strengths. They
provide affordable housing without lowering surrounding
property values. They are high-density and low-impact. They
are easier to communicate with than most forms of
multi-family housing. They require minimal subsidy to
operate. All of these are things that your city wants to hear.

It is also worthwhile to seek the support of the local city
council. Some groups have worked with council members to
reform housing and zoning codes. At the very least, a
supportive politician can be useful in dealing with the city
administration. A good way to get city council support is to
win the support of a local neighborhood association. By
showing up at their meetings and being willing to talk, your
co-op will be more engaged than most residents in the area!
State and Provincial Housing Agencies

Most states and provinces have housing agencies focused
on accessible home financing. They sell bonds or use taxes
to finance mortgages for people and organizations.
Sometimes they have programs that subsidize loans for
housing that meets certain needs or is non-profit. The
program administrators can look over your group’s plans
30
Planning Commission: A governmental organization, usually organized
at the municipal level, that dictates municipal plans for development.
52

and decide if you qualify. They are also good referral points
for other sources of financing.


Step 3: Create and Fund a Legal

Entity
What is Incorporation?
Why Incorporate?
The Incorporation Process
Different Models for Housing Cooperatives
Non-Profit Status and Tax-Exemption
The First Meetings

What Is Incorporation?
After you establish a group, and form a vision, your next
step is to incorporate31 the group as a non-profit
corporation32 or cooperative. This is the point where you
actually "create" the co-op. Sometimes people talk about
"the co-op" in reference to a building. THE BUILDING IS
NOT THE CO-OP! A co-op is a legal entity. It is a type of
corporation with a group of members who direct it, each
with one vote. The co-op exists even if all the original
members leave. The co-op exists even if there is no
building. That co-op may own a building, but THE
BUILDING IS NOT THE CO-OP.
31
Incorporation: Incorporating codifies the organization as a corporation
and as a separate legal entity from its organizing group. “Incorporating”
literally means “to make bodily.”
32
Non-Profit Corporation: A business whose primary aim is not making a
profit, and often operates at-cost for this reason.
54

Your organizing group may be operating like a co-op at this

point. However, until you incorporate, your co-op doesn't
even exist in the eyes of the law. Incorporation is the
process of creating a corporate entity or, "corporation".
This process establishes a legal status and system of
governance for the corporation. That entity has a name, can
make decisions, own property, can sue and can be sued. It
can have legal responsibilities, has a tax ID number, and it
can have a bank account. These are all the kinds of things
that an individual human can do legally. With a corporation,
it's a group of people doing those same things and making
decisions as a group. Co-ops are one type of corporation
where members all have equal votes on how the co-op
operates.
Why Incorporate?
If you've started fundraising, you have probably run into the

first reason: Where do we put the money? A corporation is
an entity that can enter into contracts and own things. This
means that the corporation can have its own bank account.
Your group would otherwise be stuck using personal
accounts to manage that money. This is a major risk for
embezzlement, accidental or malicious. It's also messy when
trying to transfer funds or accept donations. People aren't
going to want to donate to your bank account.
Corporations can own things and carry debts. This means

that any house that your co-op purchases does not have to
be in an individual member's name. The co-op can own it in
its own name. This creates much clearer lines of


responsibility and ownership once the co-op is operating.

You won't run into a situation where one person "owns" the
building and others "rent."
Corporations don't need you. That's right, you can walk

away from a corporation, and it just keeps on existing. The
entity lasts well beyond your own personal involvement.
This is especially important for setting up a co-op where
people move in and out, but the co-op remains.
Corporations don't die either, so the organization you're
setting up may outlive you.
Corporations have legal responsibilities and duties. If you

are an unincorporated group of people, each person is
liable for your group's decisions. If you have incorporated,
the corporation bears that responsibility. This is the concept
of a "liability shield." Liability shields are one of the major
reasons people incorporate. If someone sues the co-op,
they're suing the corporation, not the individual members. If
the co-op goes bankrupt, it's on the co-op, not the
individual members. (Though those members might have to
find somewhere else to live.)
Corporations can sign contracts and hire people. Many

technical assistance providers (NASCO Development
Services included) cannot contract with unincorporated
entities. Having a real organization to work with opens the
door to many other partnerships.
Incorporation also gives your organization a real name and a
real presence. Being able to say that you are part of a
registered organization lends weight to all your outreach. It
means you have committed to a mission and model, and
shows people you mean business.
56

Incorporation is a powerful and galvanizing team building

exercise. Creating governance systems, and incorporating
as a non-profit are educational opportunities. Each step
prepares the group to tackle the coming challenges of the
housing market.
The Incorporation Process

The co-op exists after complying with state or provincial
incorporation requirements. This involves writing a set of
organizing documents and filing them with the government.
You should expect to pay a fee for filing each of these.
You need two main documents to incorporate:
1. Articles of Incorporation33 - These state the type,

structure and purposes of the organization.
2. Bylaws34 - These outline the organization’s
governance, and how it makes decisions.
Articles of Incorporation and Bylaws are written in legal

jargon that is initially slow to read through. Don't be
intimidated! With concentration and persistence, you can
understand them. Organizers should talk to others who have
gone through a similar process. Co-ops that have created
structures like yours may have input about how they worked
out.
33
Articles of Incorporation: A document registered with the government
that legally establishes an organization as a corporation
34
Bylaws: Rules and regulations made by an organization to govern their
decision-making


Articles of Incorporation
Articles of Incorporation declare the nature of a corporation
to the state or province. When writing Articles, avoid being
unnecessarily specific. It may be tempting to proscriptively
include every minute organizational detail. However,
amending the Articles or changing the incorporated status is
a tedious process. It's much easier to leave options for
specific structure open to be included in your Bylaws later.
By and large, states and provinces have the same basic
requirements for incorporation:
● Declare what type of corporation you are creating.
● Declare a name, which has not already been taken.
● State the purposes of the organization.
● State a primary location of business.
● Obtain the signatures and names of the

incorporators.
● Name the initial Board of Directors.
● Include a Dissolution Clause35
● Pay a filing fee.
35
Dissolution Clause: A statement included in the articles of
incorporation that states how the assets of the co-op get divided if the
co-op is ever dissolved
58

Type
There are broadly three types of corporations: for-profit,

non-profit, and cooperative. Interestingly, most student
housing cooperatives are incorporated as non-profit
corporations, not as cooperatives. The pros and cons for this
practice are explained below, in the “Non-Profit Status and
Tax Exemption” section. The first thing to state in the
Articles is that the corporation is a cooperative and has
members.
Name
Choose a name that clearly identifies your co-op, and is

easy to remember. The name of your Cooperative must not
already be taken. Your state or province will have some
additional restrictions on corporate names. Many places do
not allow "co-op" or "cooperative" in the name if the
corporation is not in fact a co-op. Often, corporations must
include, ".inc", "LTD", "Co." or some such appendix to the
name.
Purposes
This should be the reason the co-op exists. These should be

broad purposes that your Organizing Group can all agree
upon. These purposes will be the primary criteria upon
which your co-op may be considered for tax-exempt status.
Therefore, you should consider carefully what these
purposes are.
Some example Purposes:


"To provide low-cost, cooperative housing."
"To combat gentrification through cooperative

control of land."
"To provide housing and educational access to

college students."
Location
This will be the primary location your cooperative does

business, and receives mail. Try to choose somewhere that
will remain stable for a while. You don't want paperwork
from the state going to an old address. Also, any time your
location changes, you'll have to file an amendment with the
government.
Incorporators
The Incorporators are the people filling out the paperwork

to create the corporation. You should expect to have 3 to 5
people on this list. Many municipalities require a certain
number of incorporators.
Initial Board of Directors
The Initial Board of directors will be the group responsible
for making decisions for the corporation at its outset. This is
often a placeholder Board, chosen by the Incorporators.
Once the co-op is operating, the members may elect a new
Board.
60

Dissolution Clause
A "Dissolution Clause" should be included to state what

happens to your corporation's assets if you shut it down.
Most co-ops state that their assets will go to cooperative
development or to charity. This is to prevent the members
closing down the co-op, selling the buildings, and
pocketing the cash.
Filing & Fees
The Secretary of State or the Secretary of Commerce usually

handle incorporation. They can be found online. Most
Secretary of State or Secretary of Commerce offices have
extensive resources online. These often include info on all
the steps that your group will need to take, a list of all fees,
and contact info. Some allow you to file online, download
forms, and even provide examples of properly created
documents.
In order for these to be recorded, you will be required to
pay something to the state. This is a nominal fee, and
usually paid out of pocket by the incorporators.
Bylaws
While the Articles are a brief document that defines the
corporation, the Bylaws are more involved. However, since
Bylaws do not require filing with the state, they are easier to
amend. The Bylaws define the governance structure and
decision-making process for the corporation. They define


the powers and duties of the different groups of people in
the corporation.
Take the time to read through the bylaws of one or two
other co-ops. Most cooperatives are happy to share their
bylaws. Feel free to incorporate sections from other co-ops'
documents. They have likely encountered similar questions
to yours. It is much easier to learn from their experience
than to reinvent solutions. Successful co-op organizers
blend the experience of the past with ideas for the future.
Co-op governance structures represent a radical shift in how

organizations are run. Those structures are what allows for
member control and all the other hallmarks of co-ops. They
have the potential to reorient our thinking about economic
participation. Organizers must design structures that
empower members and encourage participation in the
organization.
The bylaws will set the parameters and tone of all future
actions the co-op takes. It is therefore essential to begin
with inclusivity. Create the bylaws in a collaborative manner.
A top-down approach will linger in the psyche of the
cooperative long after the bylaws are written. Radical
inclusion and the "we own it" ideal only happens if the
bylaws are crafted in an inclusive process.
Membership
The Bylaws should start by defining member qualifications.

Who can be and who can’t be a member must be clearly
defined. If members have responsibilities required to
maintain membership, they should be included here.
62

In a cooperative, the Membership36 is the broadest and

most powerful group. The Membership is comprised of all
voting-eligible members of the co-op acting as a body. The
Bylaws must specify that the Membership at a meeting can
exercise all the powers of the corporation. This does not
mean the Membership will make all the decisions. It means
that the members have final control of the corporation, not
the Board of Directors or the staff.
The decision-making process of a general membership

meeting should be included here. Will your co-op make
decisions based on Consensus? Majority vote? What
number of members must be at a meeting to constitute a
quorum? These questions will need answers before you start
to make binding decisions.
In many co-ops, only the Membership may change the

rights and duties of members, or the structure of the co-op.
Powers of the Membership may include:
● Amending the Bylaws,

● Electing the Board of Directors,
● Buying and selling property,
● Dissolving the Co-op, etc.
Board of Directors
The Bylaws specify the composition, selection, and powers

of the Board of Directors. The Bylaws of the corporation,
more than the Articles, will remain a reference document for
36
Membership: The entire group of co-op members acting as one body.
This is often called the “General Membership” or “General Assembly”


the Board of Directors. Board Directors are responsible for

ensuring that the corporation is operating legally. Actions
taken by Board Directors, Staff, or members that violate the
terms outlined in the Bylaws are unenforceable. Members
who take such actions may be personally liable for their
consequences.
The decision-making process of the Board should be

included here. Will your co-op make decisions based on
Consensus? Majority vote? What number of Directors must
be at a meeting to constitute a quorum37? These questions
will need answers before you start to make binding
decisions.
In many co-ops, the Board makes most decisions on behalf
of the cooperative. Powers of the Board may include:
● borrowing money,
● accepting gifts,
● purchasing property,
● controlling corporate funds,
● establishing committees,
● arbitrating disputes between members or houses,
● interpreting Bylaws and Articles,
37
Quorum: The minimum number of people required to be present to
make a decision in a meeting. Example: if quorum is 50% and you have
13 members, you would need to have 7 people to make a decision. 50%
of 13 is 6.5 and as you can’t have 6.5 people, so you round up to the
next whole.
64

● and hiring employees.

● Often, there is an “elastic clause”38 that the Board of
Directors has all other powers, except those
otherwise decided by the Membership.
Committees, Houses, and other Decision-making Groups
As a co-op grows, acquiring more properties and more

members, its systems can become overly centralized and
alienating. This is a process that happens over many years,
and is hard to correct. Organizers can preempt this by
setting up ways to delegate and disperse power in the
co-op.
The Bylaws should specify the powers of any other group,
house, or standing committee in the co-op. At first, when a
co-op may be only one small house, creating these may not
be necessary. As the co-op grows, doing this disperses the
burden and power of governance and operations. A Finance
Committee may be created to deal with budgeting and
financial planning. A Maintenance, Membership, or
Education Committee could prove useful in time as well.
Any such groups will generally be unique to your
cooperative project. Each should be defined at least as
follows:
● Name of the Committee

● Purpose of the Committee
38
Elastic Clause: A clause that accounts for any powers of the Board of
Directors that are not specifically enumerated in the bylaws.


● Members of the Committee, and how they are

chosen
● Responsibilities of the Committee

● Powers of the Committee
Often, in multi-house cooperatives, each house is given
authority over house operations. Individual houses often
operate meal plans, perform maintenance, expel members,
run house meetings, choose officers, and elect a Board
representative. The Bylaws may state that the members of a
house may create house rulebooks or policies that members
of that house must adhere to. Any such policies exist subject
to the Bylaws. This means that they cannot contradict or
ignore the Bylaws. In this respect, Bylaws act much like a
constitution for your co-op. Any policy that contradicts your
co-op's bylaws is unenforceable. Like any unconstitutional
law or action - it doesn't count.

Different Models for Housing Cooperatives

There are a few different ways to categorize housing co-ops.
These relate to how they deal with their ownership structure
and who they serve. Regardless of membership or equity
model, to become a member of a co-op, members must be
approved in some way, make some kind of financial
contribution, and move in.
66

Membership styles
There are student co-ops39, which house students while
they're in college. There are community co-ops40 which
house all sorts of people. There are co-ops for families or
single parents. Some co-ops are explicitly for retirees. A
housing co-op can be set up to serve almost any
population. Most of the co-ops that NASCO has worked
with over time tend to either be student co-ops, or
community co-ops.
Equity Models
The different ways of dealing with ownership structure are
usually related to how the equity41 in a house is treated. For
most housing co-ops, a building is by far the most financially
valuable asset of the co-op.

*****Build in Graphics Here for Each Equity Model*****
39
Student Co-ops: In this text refer to housing cooperatives primarily
focused on the housing of students. Co-ops that house a community of
students and are generally near to a college or university.
40
Community Co-ops: A catch-all term for co-ops which are not
specifically intended for students.
41
Equity: This Handbook uses two definitions of the word “equity.” In a
real estate context, we are referring to real cash value held in an asset or
investment that can be bought, sold, or transferred. In a social justice
context, we are referring to fairness in access. One could say that “there
is a lack of equity in the way equity is apportioned” to mean that “there
is a lack of fairness in access in the way that cash value in ownership is
apportioned.” In this chapter, we use the real estate context.


Market-Equity Co-ops
In a market-equity co-op, a member joins the co-op, buys a
share, and lives in a unit. This is like buying a condominium,
but instead of owning one physical condo, you own a share
of the whole complex. That share gives you voting rights
and the right to inhabit a unit. The co-op sets policies which
affect all members and may have shared resources. The cost
for each member to live in the co-op depends mainly on
when they bought a share, and at what price. Often, they
would have a fairly traditional mortgage on their share of
the co-op in their own name. When you decide to leave the
co-op, you can sell your share to the next member at
whatever price you want. You keep 100% of the equity
accrued during your time in the co-op. This gives an
incentive to sell at the highest price the market will accept.
Therefore, market-rate co-ops are almost always trend away
from being affordable housing. This type of co-op is
normally dealt with by the National Association of Housing
Cooperatives (NAHC).42

Limited-Equity Co-ops
Limited-equity co-ops provide affordable housing, while
allowing members to build some wealth. When a member
joins, they buy a share in the co-op to move in, just like in a
market-equity co-op. Also, like in a market-rate co-op, the
members can build wealth by selling their share for more
42
National Association of Housing Cooperatives (NAHC):
https://coophousing.org/
68

than they bought it for. Upon sale, however, the resale price
is limited to a set amount above the original purchase price.
For example, the co-op may state that the sale price cannot
exceed 3% above the initial purchase amount. This keeps
housing prices affordable long-term. This also gives
members less incentive to increase the co-op's move-in cost
by selling with spikes in the market. Some limited-equity
co-ops use a split-equity structure where sale gains are
divided between the co-op and the member. In these, the
total sale price may be limited to, say 10% above the
original purchase price. However, that 10% may be split
50/50 or 25/75 between the co-op and that member. This
split helps keep a portion of the equity in the co-op and
available for growth. While NASCO has worked with a few
limited-equity co-ops, the Urban Homesteading Assistance
Board has dealt with them in more detail.

Group-Equity Co-ops
Group-equity43 co-ops place primary emphasis on
affordability, and not on member wealth-building. Most of
the co-ops that NASCO or NASCO Development Services
work with are group-equity. In a Group-equity co-op,
members buy a share to move in, like other co-ops. The
share, however, is not purchased from the previous
member. It is purchased from the co-op and structured
similarly to a security deposit for a rental. When a member
moves out, they get their deposit or share returned minus
any charges made to this money. Some co-ops provide a
43
Group-equity Co-op: Often Called Shared-equity, Common-equity, or
Zero-equity Co-ops, Group-equity Cooperatives are distinguished in
that members do not own an equity stake that they later sell for a gain in
price. 100% of the co-op’s equity remains with the co-op, and the
member’s benefit is a decrease in total charges.


return on the share, but this is uncommon. The price of a
share is roughly the same as a security deposit on a similar
rental space. The cost to join a Group-equity co-op is
generally in the hundreds of dollars. This is much lower than
other co-ops which may be in the tens or hundreds of
thousands. The Group-equity model tends to be better at
making sure that the co-op stays affordable. The reason for
this is that as the co-op develops equity, 100% of that
equity goes to fund the co-op. It is not paid out to the
members as cash. The co-op also has no reason to raise
member charges beyond expenses. Because the co-op is
able to hold onto this value as it grows, a group-equity
co-op is better able to fund its own growth and build an
economy of scale quickly. Group-equity co-ops are more
likely to stay cooperatives permanently. No one joins a
group-equity co-op to make money. They join to benefit
from and to provide low-income housing. This prevents
demutualization, a common problem in limited-equity
co-ops. Group-equity co-ops have been very successful in
specific markets, such as in university towns, but they make
up only 0.1% of US housing co-ops. The Group-equity
model started with student co-ops in the 1930s. At the time,
students were not concerned with building equity by buying
property. For similar reasons, many Senior Retirement
Cooperatives used this same model. Their members were at
a stage in their life when they were not concerned about
profiting from the value of their housing. Low-income
people rarely expected to ever buy homes. They adopted
the model for community co-ops due to its low entry cost
and rent control. As the housing market changes, more
young people are looking at alternatives to the traditional
path of buying a first home while young. Group-equity
co-ops provide the affordability and flexibility that many
want from their housing.
70

Keep in mind that all co-ops are different. Just because a
model works for one co-op, doesn't mean it will work for
yours. Knowing which aspects of other housing co-ops make
sense to your group is fundamental to creating a set of
shared goals and system of operations.

Non-Profit Status and Tax-Exemption

Organizing groups, as mentioned, have several types of
corporate structure to choose from. That choice has
significant financial consequences. Your choice will
determine if your co-op will have to pay taxes or be eligible
for tax-exemption44.
Taxes are one of the largest expenses that for-profit

corporations have. For-profit corporations are taxed based
on the profits that they make for their owners or
shareholders. Often, for-profit corporations structure their
expenses and depreciation to minimize their profits. This
lowers or eliminates their tax liability. For-profit corporations
are almost always ineligible for grant assistance.
Charities and nonprofits are exempt from many kinds of

taxes as they provide a public service without profit. Co-ops
designed to house low-income people or other
disadvantaged groups may qualify as charities. Charities and
nonprofits are also often the only groups eligible for many
grants and subsidies. Therefore, it is often in your co-op’s
best interest to be considered a nonprofit or charity.
44
Tax-exemption: Reduced taxes for an organization, or the amount that
an organization is legally allowed to write off as taxable income.


Structuring your Coop for Tax-Exemption

If you seek tax-exemption, you will have to choose between
incorporating as a non-profit or as a cooperative. At first
glance, it may make intuitive sense to incorporate as a
cooperative. However, many housing cooperatives are in
fact non-profit corporations. They choose this option when
there are not good cooperative statutes to organize under
in their states. These housing co-ops recreate cooperative
structures within the framework of a non-profit corporation.
Cooperative laws vary from state-to-state and

province-to-province. In some states, cooperatives are
broadly defined. In others, they are only defined for
agricultural cooperatives. Check with your state’s Secretary
of State or an attorney to find out more about how
cooperatives work in your area. An ever-increasing number
of states have laws that work very well for housing co-ops. If
your state or province does not have a good local option,
consider incorporating out of state. Michigan, Ontario,
Quebec, Wisconsin, and Minnesota all have excellent
cooperative incorporation options. In all of these, they allow
an entity to be tax-exempt at the state and federal levels.
If friendly cooperative statutes are unavailable to you, you

may be able to incorporate as a non-profit. Group-equity
low-income or student cooperatives operate at cost to
benefit everyday people. Non-profit status fits those
missions and goals.
Regulation of non-profit corporations is stricter than that of

for-profits. Cooperatives incorporated as non-profits must
be able to establish that their net income is not treated as
profit. In most cases, this means that the assets of the
72

organization may not be given or paid, other than for
services rendered, to any other person or organization.
Depending on the type of incorporation, the activities (such
as lobbying) that the organization may engage in will be
limited. This does not mean that the co-op can never have
extra money. The co-op can and should have a surplus. That
surplus is a way to grow the co-op, to protect against loss,
or to replace your facilities as they break down. It is not
supposed to be a way for individuals to extract wealth from
the organization.
Because the Directors of non-profit corporations are

volunteers and cannot be paid for services rendered as
Board members, most states and provinces limit the extent
to which Directors are liable for the corporation. These
protective laws are called limited-liability laws45.
Non-profit status gives an organization the public stature

accorded to non-profit, tax-exempt institutions. This allows
the cooperative to receive charitable donations, low-interest
government loans, access to special postal rates, etc.
Applying for and Receiving Tax-Exempt Status

Just because your cooperative may be structured as a
nonprofit and doing charitable activity, it's not automatically
tax-exempt. Tax-exempt status is granted to an organization
by the government after it has shown that it operates on a
nonprofit or charity basis. Many group-equity or
limited-equity co-ops can and have received tax-exempt
status. To do so, the co-op must be structured and
45
Limited-liability Laws: A corporate structure in which the members of
the organization are not personally liable for the company's debts or
liabilities


incorporated with the explicit purpose of targeting

tax-exemption.
If your co-op applies for tax-exempt status, you will do so
with the US Internal Revenue Service46 (IRS) or the Canada
Revenue Agency47 (CRA). They will look at your Articles of
Incorporation to see if your co-op exists for charitable work.
These should contain several standard sections:
● Protection against Private Inurement48,

● Dissolution of the Corporation,
● and Corporate Purposes.
These sections are in the Articles of most cooperatives and
many nonprofits. Without them, the IRS or CRA might not
believe the non-profit intentions of the organization and
reject the application. Therefore, before submitting Articles
of Incorporation to the state or province, organizing groups
should send a copy to NASCO Development Services to
look over. Staff members can find errors and omissions, and
provide this service for free. Furthermore, an attorney
specializing in non-profit law should also review the Articles.

46
The US Internal Revenue Service: A United States federal government
agency responsible for collecting taxes.
47
Canada Revenue Agency: A Canada government agency responsible
for collecting taxes.
48
Private Inurement: When the money or resources of a nonprofit are
used for private purposes instead of charitable ones. This could be
anything outside the mission or regular business of the organization that
financially benefits insiders or controlling members.
74

In the United States, the most common type of non-profit
tax-exemption for housing cooperatives is under Internal
Revenue Code section 501(c)(3).49 A 501(c)(3) corporation is
exempt from paying any federal income tax on any income
derived from its tax-exempt purposes. A donation to a
501(c)(3) can be taken as a deduction on the donor’s tax
return. A 501(c)(3) can be received for charitable, literary,
scientific, educational or religious purposes.

Typically, a student cooperative applies as a charitable or
educational institution, either by claiming that they provide
affordable housing50 or by claiming that they are an
educational resource for students. Co-ops not explicitly for
students generally apply for tax-exempt status on the basis
of providing affordable housing.

A US tax-exempt application can be obtained by visiting

www.irs.gov or by calling 1-800-TAX-FORM. To apply for
501(c)(3) status, form 1023 is needed, and form 1024 for
other sections. These applications will ask for some basic
information about the corporation. The Internal Revenue
Service cares most about financial information. However,
projected operating budgets and balance sheets may be
difficult to generate early on. For this reason, you can apply
for a provisional 501(c)(3) status. For provisional status, you
49
Internal Revenue Code 501(c)(3): An IRS classification that allows for
federal tax-exemption of nonprofit organizations, specifically those that
are considered public charities, private foundations or private operating
foundations.
50
Affordable Housing: Affordable housing is defined as housing that is
affordable to those below the median income of a community. (Costing
less than ⅓ of that median income amount)


state what you plan to do, and the IRS comes a few years
later to check up on you. To apply for permanent 501(c)(3)
status, prepare to show several years of records showing
that you have already been acting in the way that the IRS
demands.
Tax-exempt status can save you tens of thousands of

dollars, and is often the only way to be grant-eligible.
Therefore, NASCO Development Services strongly
recommends that a professional review the application.
NASCO Development Services has copies of successful
applications to follow and compare. It is also suggested that
groups have an attorney review the application as well.
While an attorney can cost a good deal of money, the
benefits down the road will be significant. Situations such as
this underscore the benefits of fundraising and community
outreach. If a group has a strong presence in the
community, it is more likely to be able to find an attorney to
do pro bono (for free) work. If that is not possible,
fundraising can help offset the amount that organizers will
need to chip in.
The First Meetings

Once the organization is incorporated, the Board of
Directors should have its first meeting. This meeting must
be held in accordance with any requirements put forth in the
Bylaws of the cooperative. There are two aspects of
governance that the Board should address at this meeting.
The first is corporate governance, the other is house level
governance.
76

Corporate Governance
The Board should ensure that it has the following necessary
resource documents:

● Legal Documents: Each Board member should be
provided with a copy of the Articles of Incorporation
and Bylaws for reference. Board members should
also have copies of Board policies51, and any
contracts or agreements the organization has entered
into. If any of these items are not present, it should
be a priority for Board discussion.

● Financial Documents: Board members should have
copies of budgets, and any recent financial
statements.
● Minutes52: Records of meeting proceedings are

required to maintain 501(c)(3) tax-exempt status.
Ensure that somebody (usually the secretary) is
recording the proceedings and decisions. Co-ops
should keep minutes of their proceedings to provide
a record of their decisions for future reference.
Sometimes, resolutions can be unclear. Recording
the decisions as well as the discussion helps to
establish the intent of the Board. Boards also take
minutes to protect themselves in the case of legal
51
Board Policies: Any rules that the board has created to govern its own
operation. Often these are in the general Bylaws and Policies of the
organization.
52
Minutes: An official account of what was talked about or accomplished
during a meeting.


challenges. Store minutes in a manner accessible to

all members of the cooperative, not just the Board.
Board members should receive copies of the
preceding meeting's minutes before each meeting.
At the meeting's outset, they should vote to amend
and approve the minutes for the official record.
● Policy Manual53: Bylaws provide the decision-making

structure of the co-op. Policies54 are those decisions
of the Board that guide the operations of the co-op.
Decisions about staffing, member pets or debts, or
similar topics are policies. Keeping these decisions
recorded in a Policy Manual will prove to be essential
in the long term. Maintaining a Policy Manual may
seem unnecessary early on when everyone can
remember all the Board's decisions. As time goes on,
however, there will be new members and new pages
of policy. This Policy Manual over time becomes the
foundation of the training and orientation for new
board members.
House Governance
The Board should decide whether or not each house will
have a governing body of its own. Before the first members
move into a new co-op, begin a dialogue about house
governance.
In most cooperative systems, where several properties are
owned, individual buildings have house meetings and house
53
Policy Manual: A single document with all the co-op’s operating
procedures. Members who sign contracts will be subject to these
policies, so they must be accessible and understandable.
54
Policy: An individual co-op operating procedure, enacted by the
Board or the Membership.
78

officers which are responsible for facilitating the
decision-making work of the members in that building.
House meetings usually consist of all members of the house.
Sometimes these meetings will have their own constitutions
or other formalized structure which detail their
decision-making process, officers55, and other
building-specific policies. If a system is not composed of
houses but rather, say, a high-rise apartment building,
meetings can be organized by floor or any other relevant
unit.
The cooperative should clearly establish the difference
between decisions of the co-op as a whole, and those of
each house. A policy limiting the amount of member debt is
likely to be a corporate policy. A non-smoking policy is
usually building-specific, and is thus a house policy.
It may seem redundant to have this corporate governance
system in addition to a house system, especially if the co-op
starts with only one house. However, it is illegal for a
non-profit organization to exist without a Board of Directors.
Also, the cooperative should have a body that deals with
long-term organizational needs. Ideally, the cooperative will
have only one house for only a short period of time.
Many house constitutions or house policy manuals56 begin
with a preamble which contains a version of the cooperative
principles and a general statement of goals. To avoid future
confusion, it could include descriptions of officer positions,
55
House Officer: Those responsible for facilitating the decision-making
work of the members in a co-op building or living group. These are not
the same as Board Officers.
56
House Constitution or House Policy Manual: A policy manual that
applies to the residents of one house or living group that is written,
modified, and enacted by the members of that group and sanctioned by
the overall co-op Board or Membership.


how they will be elected, and guidelines for the meeting
process. Whether the members choose to use consensus,
majority vote, or some combination in meetings, it is
imperative that the constitution be clear about the process.
It is a point of good communication to include the
responsibilities of each member in the constitution,
concerning both finances and house labor. Furthermore, the
house should establish a schedule for paying the house
charges, the procedure for assessment and rebate of net
income, and a means of member expulsion. While it may
not seem likely that a co-op will need to expel a member
from the house, it is helpful to have a process for dealing
with problem members who are not living up to their
responsibilities or are causing other problems. It makes the
affair less painful and will make sure that the problem
member has every chance to remedy the situation,
preventing the co-op from being legally vulnerable.
Each decision-making entity should establish regular
meeting times and post an agenda so that everyone has
ample time to prepare for the issues to be considered. This
is a good starting point for establishing a healthy system of
communication and positive house dynamics.

80

Step 4: Acquire a Property

Housing & Real Estate Research
Property Strategy 1: Leasing Property
Property Strategy 2 Purchasing & Developing Property
Other Property Acquisition Strategies

There are a lot of ways to get a building. (Trades, gifts,
squats, inheritances, you name it.) This Handbook will focus
on the traditional route of buying one.

Some groups start researching and exploring their options
early. Others choose to first strengthen their core group
culture, process, and vision.

Property acquisition is the most complicated of the 5 steps
to organizing a coop. It is a fascinating process, and
different every time. It requires curiosity, persistence,
tenacity, and a bit of political savvy. It comes with many
pitfalls that can have serious lasting financial and legal
consequences. Read and reread this section a few times if
you are going to try to buy or lease a property.

Every city and country has a unique real estate market.
Every organizing group is different, and so is every building.
This guide speaks broadly, as it cannot include every local
consideration needed to buy a property. You will have to do
local research and reach out for help from other human
sources wherever you can get it. Whenever possible, seek


professional assistance. NASCO Development Services

exists to help guide co-op startups through property
acquisition. NDS can be an invaluable resource to the new
organizer.
Housing & Real Estate Research

Why Research?
Market Research
Research Local Government Resources
Building & Zoning Code Research
Neighborhood Research
Creating a Prospectus
Real Estate Agents

Why Research?
Leaping into the real estate market and making a hasty
decision without research is a recipe for trouble. Research
will help organizers make better decisions about where to
look and whether a specific property will work. Further, the
research process poses another opportunity to create allies
and build a broad base of support.

Before even looking at buildings, organizers should research
the dynamics of the local community, economic system, and
the details of their ideal building. Researching the housing
market, the community context, the needs of your future
members, and specific neighborhoods are important
aspects of organizing a housing cooperative.
82

With this knowledge in mind, organizers will be
well-positioned to create a document called a prospectus to
make an argument to the public about the need for
cooperative housing. A project prospectus is a document
that outlines contextual factors surrounding the cooperative
such as: the need for a co-op, a summary of the
organization, the feasibility57 of a particular site, and the
details of how it will be accomplished.
Market Research58
You must research your local real estate market to
understand what factors affect local resident needs.
Depending on whether the market is a campus, rural, or
downtown, the locals may have vastly different housing
needs. Market researchers should ask themselves at least
the following questions:

● How much do our potential members spend on
housing?
● What other factors affect their budget?
● What cost pressures affect these housing
expenditures?
● How do our potential members cope with economic
challenges?
● Is there a housing crisis in our county? In our city? In
the neighborhood our members need to live in?
● Are real estate prices rising or falling?
57
Feasibility: The liklihood that a development project can realistically
be accomplished.
58
Market Research: Understanding the local real estate market in terms
of supply and demand, market trends, and resident needs


There are many sources of information. Organizers may
already have some sense of what market conditions are like
from personal experience and conversations with residents
living in the area. A university may have a community
housing office that can provide average rental rates for local
student housing. The “Real Estate” section in the
newspaper should provide a good idea of the property
values in the area. And of course, Craigslist, Zillow, and
other online resources provide a by-the-minute idea of what
housing costs are like in your area.

Surveys are an excellent means of assessing resident needs
in a particular community. The information may already
exist, (city or student governments will periodically perform
such work), or the organizers may have to initiate the effort.
Such a survey might incorporate the above questions into a
format that is easy to quantify and has the space for
independent comments.

One useful tool for analyzing market conditions is the
vacancy rate, which is the percentage of an area’s total
available housing that is vacant. If an area has a 2 percent
vacancy rate, people looking for a place to live have only 2
percent of the area’s available housing to choose from. The
occupancy rate is the opposite of vacancy rate and refers to
the total occupied units. So, a 98 percent occupancy rate is
the same as a 2 percent vacancy rate. Across the USA,
vacancy rates average around 7% as of 2019. However,
organizers must look at their local vacancy rate to get a
sense of their market. The US Federal Reserve tracks this
rate at:
https://fred.stlouisfed.org/series/RRVRUSQ156N.
84

Statistics about an area’s vacancy and occupancy rates
indicate the shape of the local housing market. If an area’s
vacancy rate is low —say, 2 or 3 percent— then property
values (and, thus, rent) are likely to be high because an
increase in demand without an increase in supply pushes up
the average price. This tighter housing market will lead to
other things that will affect your co-op. For example, a
shortage of housing leads to landlords being less flexible
about the length of a lease, or other bargaining items aside
from rent cost. Statistics on these issues may be available
through the technical assistance organizations discussed in
the previous chapter.

Ownership patterns are also helpful to establish, particularly
in smaller environments. To what extent is housing owned
by the government, university, local landlords, or absentee
(out-of-town) landlords? Is the situation such that any one of
these owners effectively monopolizes the market?
Researching ownership patterns can be done in some detail
at the tax assessor’s office. The records on-file are public
information and can be looked up either by owner or
address. These records will also have the assessed value of
the properties, which will likely be lower than market value.
Community Research59
The goal of community research is to understand the local
regulatory environment and the network of support from
which housing cooperatives can benefit. Generally, the
more knowledge organizers have about the surrounding
context, the more effective their efforts will be. Community
59
Community Research: A process whereby groups familiarize
themselves with various aspects of their communities


research is strongly tied to the discussion about Technical

Assistance in the previous chapter.
Research Local Government Resources

Programs exist at various levels of government to develop
affordable housing. Public sector programs, depending on
the priorities of local government, may be used to develop
housing cooperatives. Two programs funded by the US
Federal government and administered at the local level are:
Community Development Block Grants60 (CDBG) and
HOME funds61. The disbursement of these funds varies
widely but includes both grants and low-interest loans.

Another resource is a city master plan. Local governments
frequently produce master plans to prioritize the city’s
direction for 3-to 5-year periods. Such plans may call for
allocating city funds for the creation of affordable housing. It
may even recommend allocating provisions to address
student-specific housing needs. Reading a master plan will
help organizers understand the local political climate and,
more specifically, whether they can expect to get funding.
60
Community Development Block Grants: CDBG funds are part of the
US Government’s Housing and Urban Development Department. These
are intensive, competitive grants of usually $1Million+. Generally, these
are not suitable for small housing projects.
https://www.hud.gov/program_offices/comm_planning/communitydevel
opment/programs
61
HOME Funds: The HOME Investment Partnerships Program is part of
the US Government's Housing and Urban Development Department.
These funds are available through competitive grants and are earmarked
for low-income housing development. 15% of these funds are
earmarked for CHDO’s or “Community Housing Development
Organizations” - Nonprofits that are dedicated to providing low-income
housing. These are available to smaller projects than CDBG.
https://www.hud.gov/hudprograms/home-program
86

Depending on whether your planned co-op is for students
only, for another specific group, or for the community at
large, you may be eligible for certain sources of funding, but
not for others. By contacting the City Planning Commission
62
, affordable housing advocates, university officials, or other
relevant groups, you can get a better feel for what
assistance will be available to your group.

More information about master plans and city programs can
be obtained through the city departments listed in the
Technical Assistance section of the previous chapter.
Building & Zoning Code Research

City and regional building codes63 can profoundly affect the
process of looking for property. Zoning codes64 are
essentially a means of dividing a community into numerous
property zones; examples are: industrial, commercial, and
residential. Each of these zones is divided by density and
other permitted uses. Density codes can include: high,
medium, and low density. A suburban neighborhood
composed of single-family homes is an example of
low-density zoning. Urban areas, or areas consisting of
apartment buildings and similar structures are examples of
higher density zoning.

62
City Planning Commission: A government body comprised of people
who make decisions about the way the city will grow and develop.
63
Building Codes: A set of rules that specify regulations about
constructed buildings. These exist on a Federal, State/Provincial, and
on a local level.
64
Zoning Codes: The manner in which land in a municipality is divided
for certain kinds of use. Usually administered by City Councils.


In an effort to use space more efficiently, many communities

adopt a mixed-use zoning code, often in downtown
locations. This code usually allows for retail space on the
bottom floor of buildings and living space on top levels. It
has recently been creatively adopted by affordable housing
providers to use the income provided by the retail space to
subsidize the housing space. co-op organizers could use
such a code to create a mixed-use cooperative, with, say, a
member-run business on the bottom floor, and cooperative
housing on the top. Organizers should generally look for
high density areas because in order to make the housing
affordable, the building’s space needs to be populated as
densely as possible. A map of local building codes can be
obtained from the city administration (Housing Department,
Community Development Department, Zoning Board, or
Planning Commission). Likewise, cities often publish a
zoning code handbook that lists specific properties and
gives an overview of local zoning codes.

An important zoning restriction for co-op organizers is the
occupancy limit65. This restriction limits the number of
unrelated adults that may live in a housing unit. Such
restrictions are often aimed at limiting student housing in a
certain locale. The existence of such a zoning code will have
a great impact on where organizers look for property and
the overall feasibility of the project for any type of
group-housing co-op but will not affect apartment or
co-housing style cooperatives nearly as much.
65
Occupancy Limit: The number of people allowed to live in a building.
Set by local zoning codes.
88

Neighborhood Research
The goal of neighborhood research66 is to locate
neighborhoods which match the group’s goals. So, for
instance, a neighborhood that is zoned for high density,
multi-family, residential use has the kind of characteristics
that an organizing group is looking for. Another factor to
consider is the property values of the area. One can get an
idea of a neighborhood’s property values by surveying
buildings currently for sale. Student organizers should
consider how accessible a neighborhood is to campus;
either through close proximity or convenient public
transportation. Affordable community housing co-op
developers should look into similar factors, such as
accessibility to public transit, clusters of jobs, and other
amenities which will serve your future members.

Typically, municipalities are composed of some
neighborhoods that are more affordable than others. Most
of the time, “affordable” neighborhoods are that way for a
reason (i.e. the housing is “less desirable” to mainstream
consumers). “Less desirable” could mean that the housing
stock is deteriorated. Or it could mean that it is next to an
airport that is extremely noisy. Students can also make a
neighborhood “less desirable.” Neighborhoods are usually
considered “less desirable” due to a combination of factors,
and not all are benign. Organizers must recognize that often
“less desirable” neighborhoods are places where historically
marginalized communities have been forced to live in. The
66
Neighborhood Research: Applying market and community research to
specific neighborhoods


historical context of redlining67, differential mortgage

approval, and outright racism in housing must be part of
your research. Consider this especially if you are starting a
cooperative in a neighborhood that you do not currently live
in or know well. Buying up affordable properties to create
co-ops without regard for how the co-op will include
members of the community is gentrification that can easily
lead to displacement.

Some questions to answer when researching potential
neighborhoods are as follows:

● What are the characteristics of the neighborhood?
Public transit? Shops and restaurants? Close to
campus?
● Is it in an area in which your future members will want
to live?
● Is the organizing group going to focus specifically on
searching for a house or an apartment building? Or
will it consider both? Warehouse/Loft space? Empty
motels? Vacant school or nursing homes?
● What will be the size of the first building? Estimates
of the optimal size for small group democracy range
from five to twenty-five. Successful new co-ops aim
for the high end of this spectrum to maximize bulk
food buying power and minimize the effects of
member turnover.
67
Redlining: Systematic denial of various services to residents of
specific, often racially associated, neighborhoods or communities, either
directly or through the selective raising of prices.
90

Creating a Prospectus
The goal of all of this research is to develop arguments
which you can use to convince decision makers of the
importance and feasibility of your cooperative housing
project. The normal format for these arguments is a
prospectus - a written proposal package which lays out the
context and details of your plans for a housing cooperative.
Successful prospectus examples68 can be requested from
NASCO Development Services.

The prospectus is more than just a report on your research.
It is a statement about your vision, your understanding
about the needs and justifications for resident-controlled
housing, and your plans for the near and distant future. A
basic prospectus will be modified as your group begins to
find properties until it becomes a fully-formed project
proposal69 which you can submit to bankers, university
administrators, municipal officials and other potential
sources of support. Be simple, clear, and to the point. Use
the talking points that you list in your prospectus when
speaking to these professionals. Prepare to explain what a
cooperative is to them, and your plan to establish one. They
may not know that co-ops like yours have flourished across
the continent for many years. Your project may seem
strange at first to these professionals and they may not
know why they should pay attention to you. Don't shrink
back! You can learn to “talk the talk” to gain their respect
68
Lucy Stone Cooperative in Boston, MA has an excellent prospectus
that can be found at:
https://www.dropbox.com/s/dcjauhrlsuie7ok/4.%20PROJECT%20NARR
ATIVE.pdf?dl=0
69
Project Proposal: A document that helps you sell a potential investor
on investing in your project.


and attention. This is one of the most empowering parts of
the organizing process!
Real Estate Agents

A real estate agent can be an effective tool in the property
search and purchase process. Real estate agents serve to
link buyers and sellers and to broker the complex deal of
transferring property. There are generally two kinds of agent
- buyer’s agents, who negotiate on behalf of the buyer and
seller’s agents, who negotiate on behalf of the seller.

Real estate buyer’s agents know the ins and outs of the local
housing market very well. Groups can communicate their
property needs to the agent, who will come up with a list of
properties which generally adhere to those specifications.
Buyer’s agents can also provide information concerning the
general market and are some of the most likely people to
know about the availability of appropriate group-housing
properties. If sympathetic, they can prove to be good
teachers of the ins and outs of local real estate. A buyer’s
agent can help you ensure that all of your required steps
toward purchasing are professionally reviewed and happen
on time. This is an extremely valuable service that should
not be discounted.

Finding a real estate agent is not very difficult. Because they
work by commission, agents are usually interested in
potential new clients, which has both advantages and
disadvantages. It means that cold calling an agent will
almost always get a response, but also that the agent may
not know much about student or cooperative housing.
However, real estate agents do exist who specialize in
commercial rental property or perhaps even group housing.

92

A buyer’s agent may tell you that you don’t have to pay
them anything for their work - that their costs are paid by
the seller. While this is technically true, they are paid via a
commission that will ultimately be added to the total
amount of the mortgage once a purchase is made. At
closing, the buyer’s agent and seller’s agent will split a
percentage commission on the total sale price (usually
around 6%). The seller pays the seller’s agent brokerage,
who pays both the seller’s agent, and the buyer’s agent
brokerage. Out of that payment to the buyer’s agent
brokerage, the buyer’s agent is paid.

It is important to note that while real estate agents are
licensed by the state and fairly closely regulated, they are
paid by the sellers of property. Principally, their interest
rests in sealing the deal, and in getting their commission.
Because the commission is based on a percentage of the
selling price, there is an incentive to target a high selling
price for the properties they are showing. Thus, while real
estate agents may be more or less friendly and helpful, it is
worthy to be mindful of the relation of competing interests.
Obvious suspicion will damage your professional
relationship with a realtor, so take what they say in person
with a grain of salt, and critically examine it afterward.

While they can be very helpful to the property search and
purchase, it is important not to rely purely on real estate
agents. Most, but not all property transactions will involve
them. Owners who don’t want to pay a real estate
commission often advertise in the paper or online
classifieds. This is often referred to as “For Sale By Owner.”
Doing this can save you money in the short-term but comes
with additional risk. If you do embark on attempting to
purchase a property without an agent, however, ensure that


you have a lawyer to review all the appropriate paperwork.

You don’t want to find yourself in a poorly-handled
transaction.
Property Strategy 1: Leasing Property

Lease Strategy
Lease Logistics

Leasing70 property may seem like a counter-intuitive way to
start a co-op. After all, isn’t “We Own It” a co-op slogan?
Well, yes. But it depends on how you define “it”. It can be
easy to forget that the co-op and the building are two
different things. Ideally the members own the co-op, and
the co-op owns the building. But even in situations where
the co-op is leasing a building, the members still own the
co-op, and can make decisions for how to run the co-ops. It
is true that there are limitations which the owner of the
property may place on the co-op as their landlord. On the
other hand, if the co-op buys a building, the bank and other
interests may have more control over how the co-op uses
the building than the members might think.

Sometimes it is necessary to rent –especially for new
housing co-ops. Two primary reasons that groups choose to
rent housing before purchasing are that they either don’t
have funds or cannot find a feasible building for sale.
Conventionally, banks expect a 20 percent down payment
on a building and organizing groups usually don’t have it.
70
Lease: A contractual agreement that specifies the terms by which a
property can be rented.
94

Even when an established cooperative is willing to lend the
down payment to a group, many banks think that lending to
a group just getting started, especially if the members are
young or students, is risky, or that co-ops are weird.

Another reason that organizing groups rent instead of own
is that it allows a period of time to create a process for
functioning as a group and operating as a business. It is a
long jump from organizer to non-profit manager. A leasing
period creates the space for the group to transform itself
into a well-established housing cooperative with a plan for
the future.
Leasing as a Step Towards Ownership

Leasing a building can provide an organizing group with the
opportunity to plan and build an organizational structure
and culture. Coupled with the fact that it is difficult to find a
building that will be affordable and meet the needs of a
housing cooperative, it is clear why leasing is a common
development method. Living in the same household
provides an excellent space for meetings to deal with house
issues (such as creating a labor system) and business issues
(such as writing the Articles Incorporation, Bylaws, and
looking for properties). Additionally, cooperative living
saves time and money for organizers struggling through
school, starting families, or beginning their careers.

While an informal cooperative living situation provides a
good space to tackle just about any organizing task,
particular importance should be given to the task of
fundraising because it relates directly to the purchase of a
property. Small cooperatives do themselves well by creating


a development fund to save for the down payment71 of their

first purchase, which is typically 20 percent of the purchase
price. Even raising 10% will make your co-op more likely to
find help from other co-ops or from sellers who may be
sympathetic to your goals.

If there is no funding outside of the initial member share
investment, the down payment must be borrowed, which
makes the housing less affordable. A development fund, no
matter what size, will subsidize the mortgage and bring
down the amount of money borrowed, thus each mortgage
payment, and each person’s rent. There are many creative
fundraising strategies a group can use for the first purchase.

A step beyond “informal” cooperative housing would be an
intentionally leasing cooperative.72 In this case, the
cooperative is the “person” that leases the property, and
then each of the co-op members sublease their space from
the co-op. This allows the co-op to build a history as a
business, and also means that the responsibility for the lease
does not fall on any one or more persons in the group.
Some landlords who are not experienced with leasing to
corporations may be nervous about the residents’ names
not appearing on the lease. If they will not budge from this
position, try to find out if the co-op can become one of the
names on a lease, in addition to the names of the individual
residents.
71
Down Payment: The initial payment on a building, typically 20% of the
purchase price
72
Leasing Cooperative: A cooperative that does not own the building it
operates in. the cooperative usually has a “master lease” with the
landlord and creates subleases for each individual member.
96

Leasing as A Development Model

The lease strategy for housing cooperatives can also be
viewed as a development model. The model can be
characterized as a five to ten-year period of leasing a large
number of buildings from property owners and managing
the buildings as cooperative housing, effectively making it a
cooperative management organization. During this period
of rapid lease expansion,73 the organization is able to hire
several staff members and build a sizable development fund
by setting the rent income from each building leased a few
percentage points above the actual cost of the lease.

This development model addresses two prominent
problems in the co-op sector: lack of capital and lack of
capacity to hire staff. The lack of capital refers to the fact
that organizing groups usually do not have the funds to
make a down payment of around 20 percent of the
purchase price. The lack of capacity to hire staff is another
issue. Because there is a high turnover rate in student
communities (approximately every four years), student
cooperatives experience chronic instability. For similar
reasons, non-student co-ops tend to lose organizational
memory when members leave due to burnout, change of
family status, or to pursue a budding career. Such instability,
coupled with the common challenges faced by new
businesses, can lead to the demise of the organization.

Some co-ops have addressed this problem by hiring a staff
person to assist in coordinating the affairs of the
73
Lease Expansion: When a leasing cooperative begins leasing more
properties.


organization. A permanent staff person ensures that basic

tasks such as bookkeeping and new member recruitment
get done and gives the co-op some organizational memory
from year to year. However, many new co-ops are unable to
afford staff because of low funds, or unable to keep staff
due to turnover. Thus, members of small co-ops quickly
learn that money and member retention are at the roots of
many problems of the organization.

One means of addressing the lack of staff funding is to lease
a large number of buildings, budget for a net income from
each project, and use that income to fund a staff position.
While, historically, many student cooperatives have leased
to further their development, a special example is the
cooperative serving students of the University of California
at Santa Barbara. (See the text box for an organizational
profile.) UHRP74, in the early years, did nothing but leasing
cooperatives and viewed itself a “cooperative management
organization.” This example effectively illustrates the power
of leasing.
Looking for Property to Lease

There are many factors influencing the search for property
to lease, most significantly, the group’s vision for the co-op
they want. The types of group-housing appropriate
buildings that exist in the typical market include:
apartments, large houses (often former rooming houses),
university dorms, sorority or fraternity buildings, bed &
breakfasts, convents, nursing homes, and so forth. There are
74
UHRP: Now SBSHC, the Santa Barbara Student Housing Cooperative
started by leasing dozens, then hundreds of units. It grew, shrank and
now owns 6 buildings in Isla Vista with over 90 members.
98

many places to look for rental housing, both conventional
and unconventional. One factor to remember is that real
estate agents deal with rental housing as well as property
for sale. Refer to the “Looking for Property” section in the
following chapter for a more detailed discussion on the
process of looking for property.

One factor that is different when leasing property as
opposed to purchasing is rehabilitation75. It is not financially
wise to invest money in the rehab of a building that a group
will be using for only a few years. Groups may sign a
“master-lease” for the building that gives them
responsibility for minor maintenance repairs, but it should
be noted that major upkeep of the building is the owner’s
responsibility. The definitions of “major upkeep” and
“minor maintenance” should also be made clear ahead of
time. the owner’s responsibility for major upkeep is one of
the biggest advantages of leasing a property, so make sure
that the co-op is given the freedom to do what the
members need to, but without being stuck replacing a roof,
foundation, or other major expense.
Preliminary Budgeting for Property Leasing

When creating a budget for your co-op to lease a property,
you will want to balance the expenses of the co-op with the
income you will receive from your members. Remember to
budget money for things such as food, utilities, business
expenses, vacancies (use 5% or higher as an estimate),
minor maintenance, cooperative education, and
development. If the spaces can be realistically rented at
75
Rehabilitation: The process of making a building useable for its
intended purpose, typically through construction.


market rates or lower, then the project is feasible to lease.
When trying to figure out what “market rents” are, online
listings can be a good way to try and figure this out.
Members will be quick to point out that there will always be
a cheaper option than the co-op. But this does not mean
they are better values than the co-op. Try comparing the
co-op's rent (minus the cost of food and utilities) to other
housing options such as a rented room in a house with
roommates, an efficiency apartment, a room in a dorm, and
other options. Do these other options come with food? Do
they include utilities? What other amenities do they include?
Try using a few different ways of measuring the value of the
co-op to find out where you fit into the prices in the area.
Negotiating with Landlords

Sometimes owners are willing to negotiate the lease price.
Prices are often set above what the owner really wants in
anticipation that the renter will negotiate. To an extent, it
depends upon the market conditions. In a housing market
that has a high vacancy rate, landlords will set prices higher
than what they expect to get in anticipation of picky tenants.
Conversely, in a tight market for tenants, owners will not be
as willing to negotiate.

Depending on the local market conditions and the housing
stock, it may also be possible to negotiate a lower rental
price because the group is assuming responsibility for
renting the whole building. This is called master-leasing76
and is sort of like a bulk discount on housing. Professional
76
Master-Leasing: The practice of having a single entity - the co-op -
lease an entire building or floor of a building at a bulk discounted rate,
then renting the individual units out to the members.
100

property managers normally charge about 6 to 7 percent of
a property's income. As a co-op group will be assuming the
management responsibilities (filling the vacancies, minor
maintenance, marketing, etc.), and this percentage can be
used to reduce rates and fund an operating budget. It is
essential that the group is willing to do the recruitment work
necessary to assure that vacancies are low. Otherwise, the
cost of empty spaces will be assumed by the members.

Lease agreements are usually contracted for a one-year
term. However, something called an “option”77 can be
added to the lease, which gives the option to renew the
lease next year. This gives the group first dibs on leasing the
following year, contingent on being a good tenant (i.e. paid
the rent on time, no maintenance disasters). An option gives
the cooperative some extra room, if it hasn’t found a house
to buy or is not ready. Renting the same house from year to
year can also lend stability to the organization. If at all
possible, try to find out if the landlord is willing to enter into
a longer lease than one year. This provides even more
stability for your group in its early stages, allowing the
energy of the group to be focused on creating a co-op
culture and planning for your eventual purchase of a
permanent home.

There are also a few more unusual terms that can be
included in a lease which can help the co-op plan for the
77
Option: An agreement at the end of a contract that allows the signer
to engage in another contract with the issuer at their decision. usually,
this is an “option to renew” the contract, but can often be an “option to
purchase” the building.


future. One is the Right of First Refusal.78 This is a clause
which can be placed in a lease which states that if the owner
decides to sell the property during the time that you still
hold your lease, the co-op will have the chance to purchase
before a third party would. The terms of this purchase
would, to some extent, be laid out in the lease clause, and
the co-op would have a specified amount of time to meet
the terms of the Right Of First Refusal before the seller
could go to third parties.

Another option for a lease involves a lease-to-own79
scenario. There are several ways that this can be set up, but
one of the more common would involve the co-op paying a
certain amount above the monthly cost of the lease. This
extra amount would build up over the course of the time
that the co-op uses the property and would become some
or all of the down-payment of the property at some point in
the future.
University Leasing Options

Leasing with a local university is a powerful strategy for
organizing student cooperative housing groups. This option
is similar to a standard rental arrangement, however, it
wholly depends upon the university’s attitude towards an
unconventional means of providing student housing.
Typically, student housing cooperatives which work with
universities lease buildings which are university-owned,
78
Right of First Refusal: A contractual right that allows the tenant of a
building the first opportunity to buy the building if its owner moves to
sell.
79
Lease-to-own: An arrangement that specifies a time and price for the
lessee to purchase the building.
102

either on or off-campus. The terms of the lease vary widely,
as do the terms of occupancy. Key issues in successful
leases have been the value of the lease (how much the
co-op has to pay on a monthly or semester basis); whether
the residents have to be students at the university in
question; the division of responsibilities in key areas such as
maintenance; and the terms for termination and renewal of
the lease.

The Berkeley Students’ Cooperative80 (BSC), clearly
illustrates how a university can support affordable student
housing. The BSC in Berkeley, California is a non-profit
organization that owns most of its buildings it operates. In
addition to these buildings, however, the BSC also leases
several buildings and plots of land from the university at
below market rate, sometimes at only 1 dollar per year.
These partnership agreements function as a subsidy that
make their housing more affordable. In addition, the BSC
gives students from economically disadvantaged
backgrounds priority for membership.

However, be forewarned - university commitment to student
cooperative housing can be transitory. University relations
are complicated, especially when it comes to real estate. In
recent years, co-op systems at Cornell and Brown
Universities have been reduced in size because those
universities decided that their resources needed to be
concentrated elsewhere.

80
Berkeley Students’ Cooperative: https://www.bsc.coop/


The first step to working with a university is to identify the
appropriate department to approach. Understand what
motivations the university has for supporting co-op housing
and what terms they will likely set for their involvement, as
well your absolute minimum requirements are. Identify
arguments in favor of student cooperative housing which
appeal to the interests of those administrators. Key
arguments are likely to include:

● Cooperation builds community: By its nature,
cooperative housing can provide an excellent source
of student community building. They may view this as
a key factor in the development of students' overall
educational experience.

● Lower-cost: The university may be interested in
providing affordable housing at a lower cost than its
over-head may permit. Because the co-op will be
self-managed, the university can avoid the overhead
of staff for it.

● Diversifying: Different forms of housing satisfy
different students, which is why most universities
have family housing, apartment housing, dorm
housing, duplexes, etc. A student co-op can appeal
to students who may have interests different from any
of these other options.

● Experiential Learning for Students: Some universities
may desire to aid students in improving their job
prospects after graduation. They may feel that
104

cooperative management corporations, provide
students with good non-profit business experience
and make the school look good in turn

● Demand: If there is a demand for cooperative or
affordable housing, a university may simply be
interested in quickly and easily responding to a
student demand.

Negotiation With Universities

Developing a bargaining position with the university, in Rent
Contract or Lease negotiations, begins with developing a
sound business organization, one with articulate goals,
management capacity, and plan to meet its goals. While a
student cooperative management corporation may not be
able to, or desire to, be responsive to all of a university's
desires, the cooperative must be able to live up to its
requirements.

The best rent contracts or lease agreements will promise the
delivery of certain results (regular lease-payments, proper
maintenance, sanitary kitchens...) in return for the use of
buildings. The university needs to be convinced that it can
expect those results from the student cooperative in order
to negotiate a favorable lease. Ideally, both the co-op and
the university will have clear responsibilities to one another,
and both sides will feel comfortable with the benefits of the
lease.


The more the university perceives that the student

cooperative may not be able to provide certain results, the
more the university will be interested in an unfavorable
lease-agreement (involving operational interference,
university-control of capital reserves, shorter lease-terms for
the co-op) The university will be interested in establishing a
good working relationship with a leasing organization by
ensuring continuity, low-conflict, and flexibility and will
usually make many of the following considerations:

● Fair Housing: Is the cooperative compliant with the
Fair Housing Act?81 The university will be interested
in the fair admission of residents. Selective
admissions for any reason can lead to complaints to
the university administration and increased scrutiny.
Selective admissions may also put the co-op at risk
for discrimination lawsuits or a negative image in the
community.

● Finance: Can the cooperative usefully budget income
and expenses, manage its cash-flow, bill its members,
and collect its income? If the cooperative cannot
perform these tasks well, the university has reason to
worry that it may not receive its lease payments on
time or in full, or that the cooperative may have
residents subsidize substantial member debt.
81
Fair Housing Act: A federal act passed in 1934 that makes housing
discrimination illegal in private housing, public housing, and housing
that receives federal funding.

106

Similarly, poor financial organization and operation
will give the university reason to believe that the
cooperative should not manage the capital reserves
for the improvements on the buildings.

● Maintenance: Can the cooperative prevent
deterioration and maintain good upkeep of
buildings? If the building swiftly deteriorates, this
negligence can alert the university that the
cooperative is poorly run. Similarly, the cooperative
should have a good repair system, so that the
university can be assured that small repairs will be
quickly identified and repaired.

● Business Operations: Can the cooperative quickly
and adequately respond to the needs of its
member-residents and the university? If the
decision-making processes are prohibitively slow or
cumbersome, the university will worry that the
cooperative does not have the ability to deal with
problems as they arise and may inject itself into the
management structure. Similarly, the cooperative
must provide for its administration by skilled and
trained individuals, so that decisions and
administration are sound.

● Student member relations: Will management of the
property be favorably received by its residents?
Resident dissatisfaction or conflict will worry a
university.


● Community Relations: Will the properties be

well-received in the larger community? If a property is
not perceived as an asset to the community, at least
it should not be perceived as a liability.

● Optics: Will negotiations be productive and civil?
High-profile protest and positioning may be
appropriate for emergency situations, such as a
co-op being closed by the university or skyrocketing
lease charges, but could backfire in the long-term. A
university may not feel that it can work well with such
a leasing organization and may therefore wish to end
the relationship.

By developing and communicating the existence of these
capacities, student cooperatives can put themselves in a
position to bargain for more autonomy and generally more
favorable terms in rent contract and lease-negotiations.
Signing a Lease
It is important to understand the legal issues involved with
entering into lease agreements. A lease is a written legal
agreement between an organizing group and a property
owner. It specifies the rights of the tenant and the owner’s
rights as landlord. The group can either take part as an
incorporated organization (which is held responsible) or the
actual persons can enter into the agreement and take
personal responsibility. If the members do put their names
on the lease, they should realize that they are legally
responsible for paying all charges related to the agreement
and do whatever they can to make sure the co-op is a party
on the lease in order to build a history as an organization.
108

An important aspect of the lease agreement is the monthly
rental rate. Before signing, the group should analyze how
many people can legally live in the building. Also, consider
which bedrooms will be singles, doubles, and triples. How
much will each person pay at the rates that are offered? Will
people live in these spaces? Would you?

Finally, a deposit will be required for any lease. There are
usually legal limits on the size, which may include any of the
following: security deposit, cleaning deposit, utilities
deposit, and/or last month’s rent. Consult with a local
tenants’ union to find out the limit for a specific area, and
the terms on which the deposit must be returned.
Property Strategy 2: Purchasing &

Developing Property
Looking for Property
Negotiation
Inspection and Appraisal
Financing the Project
Getting Loans
Closing the Deal

To some people in the cooperative movement, purchasing
property is the most important part of organizing a housing
cooperative, as it takes land off of the speculative real estate
market. This position holds that while there are certain
benefits of living in a community, the point is really


purchasing buildings, acquiring equity, and developing

more buildings. While there is no single, monolithic “point”
to organizing a housing cooperative, (the experience of
community organizing, learning how to run a business or
non-profit, civic engagement, and democratic living are, to
many, equally or more important) purchasing property is
certainly a powerful way by which cooperatives accomplish
their goals and retain their independence from outside
influences.

With the benefits of collectively purchasing property come
the challenges of achieving this monumental task. It is no
small affair for a group of often overcommitted organizers to
incorporate as a non-profit organization, formulate a system
of operations, find a property feasible for purchase, and
obtain financing from conventional and/or alternative
lenders. Furthermore, there is the equally monumental task
of successfully operating the cooperative in the long-term
(recruiting new members, making mortgage payments,
purchasing more properties) as the original organizers go on
to other things and the founding energy dissipates.

This chapter addresses the critical technical challenges that
an organizing group will tackle during their attempt to
purchase property. Issues such as the property search, real
estate professionals, financing, and signing the agreement
are discussed in a manner that makes them understandable
and accessible to people who are just learning. Once a
group begins this process, the Handbook’s earlier emphasis
on research and organization will become crystal clear. Such
preparation is critical to understanding the issues involved
with purchasing.
110

Looking for Property to Purchase

Before an organizing group begins the property search,
participants should establish the characteristics they are
looking for in a building. A productive group exercise is a
brainstorm session to create a profile of the ideal building.
The following questions will bring the right issues to the
table and may inspire further discussion:

● How many people will live there?
● Should the building have a group kitchen or at least a
big kitchen?
● How much (or how many) common area/s should
there be?
● Is space for parking necessary, both in practical and
legal terms?
● What is the ideal mix of singles and doubles?
● Is yard space necessary?

The next step after the ideal has been created is to throw it
away. Not literally, of course, but organizing groups should
be aware that the building they find will probably not be
their perfect ideal because of the difficulty of finding
feasible buildings suited for cooperatives. Nonetheless, it is
useful for group members to know their preferred
characteristics, so they are able to recognize them during
the property search. Be aware, though, that there may be
properties which have all of the necessary characteristics,
but do not fit the model of what your members think they
are looking for. In many areas, groups may be focused on
finding big funky buildings with lots of character, and


assume that apartments, multiple house structures, nursing

homes, or other buildings won’t work for them. But by
keeping an open mind, and focusing on the needs of the
group, rather than a set idea of the type of building you are
looking for, you will have a better chance of finding a space
that best fits the co-op's needs.

There are certain kinds of buildings that organizing groups
should consider because they’re well-suited to meet the
needs of a group house. Sorority and fraternity houses tend
to make good student cooperatives because most are large
and well-suited for group living and are near campus. Other
possibilities include: rooming houses, convents, bed &
breakfasts, and houses that have been subdivided into
apartments. Redesigning such buildings into a group house
can make rates more affordable. Choosing one central
kitchen and turning remaining kitchens into bedrooms will
increase the number of people paying for the total
mortgage and, consequently, each individual’s rent will be
lower.
Examples of Housing Cooperative Building Structures

Over the years, the housing cooperatives around the
continent have built or purchased several different types of
facilities designed to meet the particular needs of an
individual community. While there are examples of many
types of structures which can and should be considered for
use by the cooperative, including some examples such as
geodesic domes and warehouse lofts, in most situations one
of four basic types of building styles have been used.

112

Small Group House

In this model,
ten to fifty
members share
a house, which is
often an older,
converted
building. This
“group house”
usually has
shared meals
several times per
week, often
every day. Members generally contribute about four to six
hours of labor per week to the operation of the household.
This labor includes preparing meals, cleaning the kitchen
and “common areas,” collecting rent and paying bills, minor
maintenance, and possibly office work within the central
management structure. Co-ops of this size will have elected
officers responsible for administrative tasks and networking
with the central organization. A note: Co-ops of less than 10
often lack the economies of scale that larger cooperatives
have, have more admin work per member, and are more
susceptible to high turnover causing crises.

Large Group House, or Small Dorm

In this model, approximately 100 members share one large
co-op, either as a single high-rise or dorm-style building, as
several buildings sharing one location. There are usually
shared meals. Some have constructed their own buildings
for this model, usually resulting in a structure of about eight
to ten “suites” which offer cozy areas in a large building.


Most of these

large houses are
operated quite
similarly to the
small houses,
but it has been
observed that
houses of this
size require
more people in
administrative
positions and
may require staff
specific to the building; i.e., a building manager, cook, or
maintenance personnel. On the other hand, co-ops of this
size offer a better economy of scale, and are able to deliver
more goods and services for the same amount of money
and labor per person.

Small Apartment Building

These buildings
are often
purchased or
built by co-ops
that have group
houses to give
older members
more privacy.
Some
organizations
with these types
of buildings do
require a work contribution, often for groundskeeping or
114

maintenance. There are usually no shared meals and there is
generally a “small” feeling to the co-op but with a high
degree of privacy. A similar structure is the townhouse
complex, organized very successfully as a cooperative in
many family-housing situations.

Large Apartment Complex

In this model,
members will
share
apartments of
two to five
bedrooms. This
model often
allows the
largest number
of members
housed per square foot of land but may lack a “feeling of
cooperation”. There are no shared meals. Students are
usually required to contribute very little labor to the
cooperative in this model, although they may organize their
apartments as “mini co-ops.”

There are many cooperatives that consist of only one house,
but the majority of housing cooperative members live in
buildings that are part of multi-house co-ops. These co-ops
are organized into a central organization governed by a
member-elected Board of Directors, which is accountable to
the membership. In a co-op of several group houses, or one
with houses and small apartment complexes, Directors are
usually sent to the Board as representatives of a building. In


high-rise apartment complexes, Directors may be elected at

large, or represent a floor or wing of the building.

We recognize that the majority of those reading this text will
be looking to start either small apartment-style or
group-home-style cooperative houses. However, the
concepts apply to larger systems as well, and if you are a
member of a large cooperative system, these organizing
steps can apply on a significantly larger scale.
Structural Feasibility & Occupancy

You must find out if your building can house your
cooperative. There are 3 parts to feasibility, and your
building must meet all 3. It must be feasible structurally,
legally, and financially. This information will help you know if
a building meets your needs. It will help convince banks,
lenders, grantors, and other sources of financing that your
plan is realistic.

A method for examining each potential building should be
devised by the organizers. Consider dividing the following
responsibilities among group members.
● Make a floor plan to keep track of how many rooms
are there, and how you could repurpose them.
● Note maintenance issues (leaky roofs, critters, cracks,
loose bricks, dead trees)
● Calculate a quick financial feasibility check
● Research building codes, ownership, and the value of
other buildings in the neighborhood.

Here is a list of questions to consider when looking for a
property. It is not exhaustive but is a good place to start.

116

● Is the structure of the building in good condition?
Roof? Foundation? Paint job? Heater/AC?
● Is the water pressure good? How about the rest of
the plumbing? Electricity?
● Is the house weather-proofed?
● Is there a Fire Alarm? Sprinkler System? Do you need
one?
● Are there mice, rats, bugs, or other critters?
● Does the layout of the house balance community
common space with privacy for members?
● What size is the kitchen? Is there enough food prep
and storage space?
● Does the kitchen adjoin to a common room?
● What is the neighborhood like?
● What is the Occupancy82 of the building?
● Can the building be legally occupied and used for
the purposes that you desire? Key sources of
information for assessing occupancy issues include:
○ How is the building currently used? If it's a
group housing, or has multiple units, that's a
good indication. How many people does it
currently house?
○ Zoning and building departments - go to your
City Zoning, building, and planning
departments. Ask for information on a
particular property, its zoning, and what legal
uses are eligible under that zoning designation
(you're probably looking for something in the
multiple-family/apartment/rooming house
range). You'll also want to find out if there is a
82
Occupancy: The total number of unrelated individuals
allowed to live in the building. This is often the most
significant delimiting factor in whether a building is suitable
for co-op needs.


maximum number of people who can live in

the building - that'll be key when it comes time
to look at the financials. Many cities now list
zoning and other information about a property
online.
○ Other factors that might impact legal
occupancy of a property include lot size,
number of off-street parking spaces, rules on
the use of basement or attic spaces, and
requirements for adequate light, ventilation,
and accessibility, or “egress,”83 of sleeping
rooms. You will also need to find out whether
your municipality has restrictions on the
number of “unrelated persons” who can live
together, as this will affect the occupancy of
some properties.

Very seldom will an organizing group find a building suited
perfectly to their needs. It is often the case that a building is
in need of rehabilitation in order to make it livable or to
conform with local fire and health codes. Frequently
changes in a building need to be made because of
increased occupancy or the previous owner’s neglect.
Often, this “fixer-upper” condition of the building is a large
part of why the building was affordable for the co-op and
gives the members a chance to adapt the building to suit
their needs. Generally, members work closely with NASCO
Development Services staff to ensure that things proceed
properly through the planning and renovation.
83
Egress: The means by which rooms are entered or exited.
Usually, Bedrooms require 2 paths of egress, a window and
a door of certain size and accessibility restrictions, subject to
fire and building code.
118

All of this information is useful in determining whether a
building is structurally feasible to be used as a housing
cooperative. While there are many factors affecting whether
a building will work as a cooperative, structural feasibility is
the most important. In order to work with NASCO
Development Services and be eligible for most co-op
funding sources, it is standard for staff to come to the site to
examine the building and perform a detailed structural
feasibility analysis, or “crunch the numbers.”

Often it takes years for groups to find a building that is
feasible to purchase. After looking for properties for an
extended period of time, organizers develop an eye for
good cooperative houses. In fact, many begin to see the
world in terms of potential co-op buildings. They stop each
time they find a large building, map out which
neighborhoods would work for multiple developments, and
know that because a building is not officially on the market
does not mean the owner won’t consider. Property records
are kept at city hall or the housing department, where one
can research the owner or property management firm. A
tour can be arranged through an agent or property owner.
Preliminary Budgeting for Property Purchasing

Cooperatives are generally subject to the same market
conditions as other businesses, and there is no mandate
that cooperatives' prices be lower than that of the
competition. In contemporary markets, national and
transnational corporations sell merchandise at incredibly low
prices by paying their employees poorly, and/or relying on
the lower costs of labor and materials in other countries.
The same concept applies to landlords who maintain


artificially low rents by minimizing their reinvestment into

their properties.

Some cooperatives have made a conscious decision to keep
prices high enough to pay their employees fairly, provide
higher quality goods, offer some additional service, or
achieve other social goals. It can be helpful to think in terms
of value instead of price. It may cost less to rent an
apartment or buy your rice from a chain store, but there are
factors other than the gross dollar value to consider. There
are issues about the sustainability of the cooperative, the
co-op’s ability to keep money circulating in the local
economy, or services added to the transaction that increase
the value.

120

Development Budget (Sources and Uses of Funds)

A Sources and Uses Document, also known as a
Development Budget,84 is where you come up with the
sticker price for purchasing the building. A quick way to do
this is as follows. Take a piece of paper:

● On one side list of all of the costs that are involved
with turning the building into a working co-op house.
Include an estimated purchase price, any
rehabilitation work that you think might be necessary,
furniture and appliances, anything else that seems
relevant, and then add 10% for miscellaneous
contingency items. Only count the one-time
expenses involved with purchasing and starting the
co-op. Total these items - they are known as the uses
of funds.

● On the other side, list all of the sources of financing
and their terms. An easy place to start is to assume
that you'll need a bank mortgage loan for about
75-80% of the cost of the project - so take 80% of the
total ticket price from the other side (the terms of a
commercial bank mortgage are usually a loan for 20
years or so at about 6-9% interest right now). The
remainder is risk financing that you'll have to drag up
from somewhere. Does your organization have cash
in the bank? How much of your current building can
you use as equity (what do you owe on its mortgage
vs. what it is worth - you can count that as cash in
hand when it comes time to go to a bank)? Are there
84
Development Budget: The budget that determines the
total initial cost of the project and where the initial money
will come from.


City programs to help affordable housing (the terms

of these will vary)? Will a university consider financing
part of the cost? Could you get a loan from an
existing cooperative? Are there private persons that
your members could borrow the money from, and
then pass the loan through to the co-op? Total these
- they are the sources of funds.

The sources and uses need to match! If they don't, you
probably don't have enough funds and need to find some
more. Or you need to evaluate the uses for your capital, to
see whether you need to negotiate a lower purchase price
or perhaps change the amount of rehabilitation that you are
planning for the building. Finding sources of funds is often
the largest hurdle which a new housing cooperative needs
to tackle in starting or expanding. Don’t let this stop you
from analyzing properties; try making some assumptions
about sources of funds, and then work later on your
Statement of Cash Flows, also known as an Operating
Budget.85

85
Operating Budget: The budget that determines the
continued operating costs and revenues of the project after
it has been purchased/built.
122


124

Operating Budget (Cashflow)

Finally, you need to see if the building can generate enough
money to cover the costs of running it. Take another piece
of paper and:

● On one side total up all of the revenue that you can
expect from the building in the space of one year.
For housing co-ops, this is almost entirely rent
(assuming that food and utility charges are a part of
your rent). Look at each space in the house and
determine what you could reasonably charge for it.
Total the rent for each month and come up with a
gross figure for the whole year. In a student
organizing group, if the summer housing market is
significantly different, you will need to do two
different sets of revenue, one for school year and one
for summer.
● On the other side, total up all of the expenses that
you can expect to incur in a single year. Look at two
separate types of expenses:
○ Debt Service86 - if your Sources of Funds
includes borrowed money (loans, mortgages,
etc.), and it will, you need to calculate and
itemize the annual payments that each loan
will require (there are amortization books or
programs that can help with this, or your
spreadsheet can do it).
86
Debt Service: Money spent paying back debts to
creditors.


○ Operating expenses87 - Usual categories of

expenses include: property taxes, heating,
electricity, water, and maintenance. You can
either get figures from the previous owner or
try and estimate them based on your current
building, if you have one.

Only worry about accuracy to the degree that you can. Try
to estimate costs in a way that you can defend if you need
to, but don't worry about having every single cost pinned
down just yet. Subtract total expenses from total revenue. If
the amount is positive, you're probably looking at a building
that will work as a co-op. If the amount is negative, you
need to look closely at how you can make this building
support itself. Possible strategies include increasing the
number of people in the building paying rent, eliminating
unnecessary expenses, or changing the structure of the
sources and uses of funds to lower the debt service
expenses.

87
Operating Expenses: Money spent in order to keep the
organization running.
126


If all of these feasibility elements fall into place, then the
building is probably feasible. Don't be surprised if it's not,
though. It can take a long time to find a building which will
work as a co-op.

Financing new housing cooperatives is one of the most
difficult aspects of the development process. Obtaining
loans from conventional lenders is often very difficult, even
when a group has obtained the funds for a down payment.
The cooperative movement, however, has access to some
resources from within the greater co-op community to
finance new co-ops.
Making an Offer and Negotiation

After a desirable and feasible building is found, the next
step is negotiating a price. The negotiation process begins
with submitting a purchase offer, also known as a sales
agreement88 to the seller or the seller’s agent. The purchase
offer is an offer to buy a piece of property under certain
conditions, with certain stipulations called Contingencies.89
It is submitted to the seller of a piece of property for
consideration. They may respond by accepting the purchase
offer, or, more likely, by submitting an edited version of the
offer, known as a counter-offer. When negotiating prices
88
Purchase Offer/Sales Agreement: A document that
constitutes a legal contract to purchase the building at the
offered price.
89
Contingencies: Sections in a Purchase Offer that allow the
buyer to back out of the purchase without penalty if certain
conditions occur. (like an appraisal of the building coming
back too low)
128

and going through the counter-offer process, it is important
to be aware of what the co-op can and cannot afford. With
each offer, the feasibility analysis must be recalculated. If
the property proves unfeasible, the group must be willing to
walk away. Giving up on buying your first choice of property
is a real setback for the group, but it is much better than
being stuck in a bad mortgage.

Purchase offers and sales agreements are accompanied by
earnest money,90 which is typically about two to three
percent of the purchase price. Earnest money serves as a
deposit with the seller, establishing a serious intent to
purchase the property. It differs from a down payment in
that down-payments are part of the actual purchase. If the
purchase happens, the earnest money usually becomes part
of the down-payment. If the co-op backs out of the
purchase for reasons not covered by the purchase offer, the
earnest money is typically lost. Aside from these technical
considerations, though, is the fact that an organizing group
must supply this earnest money in advance of the purchase.
Again, this is a situation in which building a strong network
of community contacts can pay off: supporters often have
the resources to provide a loan or grant for part or all of this
money. In some situations, NASCO Development Services
can arrange a loan from an established cooperative for the
earnest money.

90
Earnest Money: Cash Money put down to establish the
seriousness of the offer to purchase. if the buyer backs out,
the Earnest Money is given to the seller to compensate for
wasting their time.


Purchase offers, if accepted, make certain commitments to

the seller. In summary, a purchase offer states:

● The amount the group is willing to pay
● When it would like to take possession
● The type of financing being sought
● That taxes and utilities will be prorated (appropriately
divided)
● Protects the buyer against partial ownership claims
and unspecified repairs on the property

Purchase offers also contain various contingencies. These
contingencies are items that the buyer and/or seller must
have resolved before the purchase can go forward. The
most common contingency is for financing91, which gives
the buyer a period in which it has to find a source willing to
lend money to buy the building (usually 60 days). Other
contingencies might include: approval by the cooperative’s
Board or general membership, approval of the agreement
by an attorney, a thorough property inspection92 by a
91
Financing Contingency: A Contingency that states that
the Buyer can back out if they can’t get reasonable
financing.
92
Property Inspection: When a buyer hires a licensed
property inspector looks through the building for
deficiencies. The inspector provides an inspection report to
the buyer. The buyer can then use the report to adjust the
offer as long as there is an inspection contingency.
130

licensed contractor, a valid Certificate of Occupancy93,
termite inspection94, Zoning Approval95, or other factors that
may affect the feasibility of the project.

If the purchase offer is accepted and signed by both parties,
it is important for organizers’ to be cognizant of their
obligations and ensure they are fulfilled. An important
obligation is the stipulation that the buyer keep the seller
informed of efforts to obtain financing. Purchase
agreements have this stipulation to protect sellers from
people who are not serious in making an offer on their
property and to be fair by keeping them aware of difficulties
which may make compliance with the agreement
impossible. This requires that the real estate agent be
notified, in writing, if there are significant changes in the
financing as planned, or in the timeline initially projected. As
NASCO Development Services is normally responsible for
arranging the financing, it takes much of the responsibility
for informing the seller of these changes.

Finally, it is important for organizers to keep NASCO
Development Services informed of any on-site
developments which may affect the purchase agreement,
93
Certificate of Occupancy: A document that certifies a
building's compliance with applicable building codes and
deems it viable for occupancy.
94
Termite Inspection: What it sounds like. If there are
termites in your area, ensure that this is done.
95
Zoning Contingency: If it turns out that the buyer cannot
get zoning approval to use the building as a cooperative,
this allows the purchase offer to be cancelled.


even though staff usually maintain a high on-site presence.

However, this does not guarantee that NASCO
Development Services has knowledge of everything that
transpires. Generally, the more effort invested into healthy
communication, the less mistakes that are made.
Inspection and Appraisal

The first stage in obtaining financing is assessing the value
and condition of the property, which is done through an
appraisal and a property inspection. This step can only
occur once a purchase offer has been made.

An appraisal is an estimate of the value of the property by a
certified expert. It is information that financial institutions
will need to know in considering loans. The appraiser
considers these options and estimates the market value
accordingly. Most of the time, one of the contingencies that
gets covered in a purchase agreement is that the building
gets appraised to be worth at least as much as the asking
price. If something comes out of the appraisal showing the
value to be lower than the asking price, your group would
submit a new purchase agreement. Appraisers commonly
estimate the value of a building using the methods listed
below.

● Replacement Cost: How much would it cost to
replace the current facilities?
● Market Data: How much are comparable properties

in the local market selling for?
● Income Approach: What value will a property with

this income support?
132

As stipulated by the buyer in the purchase agreement, the
inspection ensures that the property is in satisfactory
physical condition. It also identifies what kind of
rehabilitation96 will need to be done to the property.
Hopefully, the inspection will not find anything unexpected.
If major problems are discovered, the feasibility analysis
should be modified to reflect this. Depending on the
situation, the group may need to submit a new offer, or
even start looking for a different property. An inspection
should be performed by a licensed independent housing
inspector who will do the type of inspection desired by the
buyer. Independent inspections commonly cost a few
hundred dollars, and the findings are private to the buyer.
Inspections usually focus on the following:

● grading, drainage, landscaping, fences, paved areas,
retaining walls, recreational facilities, garage
● exterior walls, insulation, doors, windows, porches,

decks, steps
● roofing, vents, hatches, skylights, gutters,

downspouts, chimneys
● crawl space or basement: construction, settlement,

water penetration, termites, rot
● attic: access, ventilation, insulation, signs of leakage,

fire safety
96
Rehabilitation: The process of making a building useable
for its intended purpose, typically through construction


● interior: walls, floors, ceilings, fireplace, stove, stairs,

closets, fire safety
● electrical system
● plumbing system
● heating and cooling systems
● kitchen and bathrooms

An inspector is hired by the buyer to inspect anything of
concern in addition to the standard list. Some inspectors
can also be asked to estimate what it will cost for each
repair that needs to be done. However, usually they will not,
and you will have to find an independent contractor to
provide an estimate. It is smart to get more than one
estimate for major rehabilitation projects that you become
aware of as a result of the inspection. A feasibility analysis97
is not solid until after the inspection and rehab estimate,
which makes the viability of any project uncertain.
Developing a Rehabilitation Plan

Even entering into a property with all the necessary
rehabilitation fulfilled, it is often desirable to upgrade in
other ways which will improve its functioning. Possible
renovations could be something that a member can
facilitate, such as converting a garage to a bicycle shed.
More complex projects require hired labor: installing
97
Feasibility Analysis: A study to determine the likelihood of
completing a project by taking into consideration all the
relevant factors at play.
134

skylights, replacing the roof, or adding additional living
space to the building.

As mentioned, much of the renovation work will be required
by local fire and safety ordinances. To learn about what
changes will be required of the group, it is necessary to
make contact with the city housing building inspector. Often
it is advisable to have the city inspector tour the house
personally, because their interpretation of the code is most
relevant.

Plans for major renovation should incorporate the assistance
of an architect, who will be able to apply the local housing
code to the new cooperative. As with other professional
help, it is advantageous to create an advisory committee
that can provide sympathetic and affordable advice. A
sympathetic architect can give relevant assistance to a
rehabilitation plan.

After the city inspector has compiled a list of requirements
and the plans have been completed by the architect, the
rehabilitation should be carefully planned. To begin with,
work that can realistically be performed by willing members
is noted. Next, a schedule is developed which includes
priority renovations and work coordination. Further, bids are
solicited for repairs and construction: generally, three bids
per work project. Members can play a key role in finding
contractors who are recommended by people in the area
and checking on the reputation of others. This kind of
recommendation is another area where a good relationship
with the neighborhood association members can pay off.
Factors in choosing a contractor are:


● Experience: Have they worked with the cooperative

or neighbors on other projects and done a good job?
● Time: Will the contractor be able to complete the
project when needed?
● Guarantee: Is the work guaranteed and how do
different bid guarantees compare?
● Price!
● Cooperation: Is the contractor willing to work with
some members?
● References: Does the contractor have good
references or work to be displayed?
● Work included: Is the bid of one contractor more
complete than another? Will subcontractors need to
be involved?

Organizing a work committee is helpful, if the co-op wishes
to reduce its rehabilitation costs through sweat-equity, or
member volunteer labor. NASCO Development Services
can help establish what tasks are doable by members and
how long tasks may take. Such decisions should be made
when the rehab schedule is developed. When it comes time
for members to begin certain tasks, everyone in the group
should be clear about their responsibilities. For example,
informing a contractor that rubbish will be cleared out of an
attic, and then not having it done when they arrive with the
work crew, will increase the overall cost of the project.

NASCO Development Services usually advises groups to

appoint a development liaison who is responsible for being
the on-site coordinator. If there is room in the budget,
provisions can be set aside for a development intern to paid
for the large amount of work that is required of the liaison.
The liaison is responsible for informing the work committee
of its responsibilities and checking-up on the work that
136

contractors perform. Not only is the final product important
in this case, but being aware of work which is falling behind
schedule can be of crucial importance. Delaying one job can
have a domino effect on the renovation and cause the
cooperative added inconvenience and expense.
Financing the Project
Mortgage Financing
Financing the purchase of property is generally done
through a mortgage loan98. A mortgage loan is a loan that is
made “against” the property which the group is purchasing.
This means that the property being purchased serves as
collateral which can be repossessed if the new cooperative
defaults on its loan payments.

Mortgages typically provide a maximum of 75 percent of
the financing for any given purchase. This gives banks
protection in the case of defaults: they are very likely to get
75 percent of the value of the house through a resale after
repossession. The remaining 25 percent of internal capital
and other financing also tells the bank that other people
have enough confidence in the buyer’s ability to pay, to risk
their own money. The 25 percent is considered the
cooperative’s down-payment.99

98
Mortgage Loan: An agreement in which a bank lends
money at interest in exchange for taking title of a property,
on the condition that the transfer of title is void upon full
payment of the loan.
99
Down Payment: The initial payment on a building,
typically 20% of the purchase price


Another attribute of mortgage financing for new

cooperatives is that, often, it is at a variable rate, which
means that the interest rate of the loan is tied to prevailing
market rates and subject to go up and down. This is unlike a
typical home owner mortgage which is fixed and has the
same payments throughout the loan. The rates can change
monthly, yearly, every three years, five years, etc. Generally,
this makes planning for the co-op very difficult. Banks will
generally give a fixed rate to new co-ops, although the fixed
rate will be higher than the lower end of the variable rate.

Loans also have two lengths attached to them. The first is
the amortization100 of the loan. “Amortization” refers to the
length of time it would take to pay off the loan if the same
amount is paid each month. Commonly, amortizations are
set to take 20-25 years to pay off for commercial mortgage
loans, and 30 years for personal mortgage loans. The longer
the amortization the smaller the monthly payment —but
more payments are scheduled to be made and therefore
the more total interest paid.

The second length of time is the term101. “Term” refers to
the length of time that the buyer has to pay off the entire
balance of the loan. This is not necessarily the same as the
amortization as we will see in the following example:

For example, a loan may have payments figured for a
30-year amortization and a term of 5 years. This means that
the entire balance is due 5 years down the road, but only 5
100
Amortization: The process of reducing or paying off a
debt with regular payments.
101
Term: The time period during which the loan will be paid
off, usually 1-10 years.
138

years’ worth of a 30-year payment plan will have been paid
off by then. This leaves 25 years’ worth of payments due
suddenly at the 5-year mark! This is called a balloon
payment.102 Balloon payments occur because interest
payments change over time, and the lenders may wish to
renegotiate the loan periodically. At the 5-year mark in this
example, the borrower and lender will need to refinance this
mortgage - either attempt to extend the loan’s term for
either another 5 years or a longer term with the same
lender, or search for alternative lending sources.
Subsidiary Financing
Historically, obtaining subsidiary financing, the remaining 25
percent of the loan, has posed a difficult problem for new
cooperatives, which is discussed in the previous section. In
NASCO Development Services projects, subsidiary
financing is most successfully obtained from the limited
resources within the cooperative movement: established
cooperatives, the Kagawa Fund, local co-ops, and member
shares.

Other options for subsidiary financing are local supporters
and organizations: local businesses, non-profits, universities,
cities, and philanthropists. Though these are not likely to
produce loans for a significant portion of the subsidiary
financing, every piece of the financing package is important.
102
Balloon Payment: A large payment made at the end of a
loan that pays off the entire remaining loan balance.


Member Investment
A common element of subsidiary financing is member
investment,103 which serves several purposes. With respect
to the organization, it is one of many ways in which
members create and maintain a commitment to the
cooperative. This sense of ownership creates an incentive to
care for the buildings and the organization. Furthermore,
the contribution to the purchase of the building makes the
project attractive to mortgage and subsidiary lenders. Also,
the member investment reduces the size of the mortgage
payments and thereby adds to the affordability of the
project. The downside to a high member investment is that
it sets a higher barrier to entry for new members to the
co-op, who may not have hundreds or thousands of dollars
to put forward as the capital to join the co-op.

If the cooperative defaults,104 and the property is sold, the
mortgage and subsidiary lenders want to recover their
money. A return of 95 percent of project cost is used as a
standard, in case the property must be sold quickly.
Therefore, lenders generally look for around 5 percent
member share investment to cover the loss. The member
shares effectively function as a built-in incentive for member
participation.

The concept of member shares is common throughout the

movement, even in, say, a food co-op. Members purchase
103
Member Investment: When members contribute to the
down-payment of the co-op. This can come in the form of
grants or loans. If loans, they are subsidiary to the primary
mortgage.
104
Default: When one ceases to make payments on a loan
due to lack of funds
140

shares in the cooperative, and the shares are the source of
initial capital for the venture. They are equity contributions
which last through the member's term of involvement. The
sum is paid upon entering the cooperative and is refunded
when the member leaves: it also functions as a security
deposit. Usually, the share is not any more than the area’s
average deposit. Different states and cities have their own
regulations regarding deposits, though, and many areas
consider the share in the co-op to be a form of deposit.
Make sure to check with the local Tenants’ Union105 to find
out if there are regulations that would affect the collection
and use of member shares in your co-op.

Another kind of member investment is a loan, which either
comes from a member or a relative. These investments are
unique in that they are socially-responsible by supporting a
good cause and personally- responsible by supporting
education and affordable housing. While the terms of loans
depend on circumstance, the interest rates can be set to
make them attractive investments which would provide a
respectable return on investment106 (abbreviated as ROI).

A strategy for member loans which has been used before in
low income housing is through credit union membership. If
a credit union will not lend directly to the co-op, perhaps
they will consider lending to the members, who in turn will
lend the loan to the co-op. If organizers are members of a
105
Tenants’ Union: If available in your municipality, a
tenants’ union is an organization that represents tenants
against landlords and advocates for their rights.
106
Return on Investment: Measurement of the gain or loss
generated on an investment relative to the amount of
money invested.


credit union, they can take out loans for the amount of their

member loans to the cooperative. The interest paid to the
member on their loan would be equal to or greater than the
interest of the credit union loan. Thus, the member loan
would have no direct financial costs, while still providing a
form of member-loan investment.
Movement Resources
The housing cooperative movement has responded to the
difficulties in obtaining financing by developing a pool of
resources which it can draw upon when necessary. One
strategy has been to lobby the government for the use of
public funds. In both Canada and the United States, all
levels of government have provided low- interest loans and
grants for the capital needs, operations, and rehabilitation
of affordable housing cooperatives. The problem has been
that government support is not consistently reliable,
fluctuating with the political climate.

The principle of cooperation among cooperatives is a
movement-building force that has helped in overcoming
financial barriers. Many established cooperatives are willing
to loan money to organized groups with feasible projects.
Even better, local cooperatives are sometimes willing to
provide loans and play the role of sister organization.
However, cooperatives are not obligated to provide loans,
which means that it comes in waves just as with government
support. A second approach to loans from existing
cooperatives is to ask if the established co-op will be willing
to cosign on a loan from a bank or other traditional lender.
This would mean that the loan would be based on the credit
rating of the existing co-op, but that the money would come
from the bank, rather than the reserves of the established
142

co-op. The established co-op will still be responsible for the
money if your co-op fails to pay.

A model which addresses the problem of wavering support
is the creation of a revolving loan fund that is controlled by
participants within the cooperative movement. A revolving
loan fund is a pool of money which loans initial capital to
projects and re-uses the repaid money by loaning again. It
grows by charging interest, soliciting depositors, and
fundraising. The initial capital could be provided by
established cooperatives or through public funds.

The Kagawa Fund for Cooperative Development107 is a
revolving loan fund named in memory of Toyohiko Kagawa.
The initial capital was provided by the Japanese cooperative
sector and is currently controlled by NASCO Development
Services and the Cooperative Development Foundation.
The current funds are only sufficient to provide for part of
the subsidiary financing of a few projects each year.
However, a fundraising effort focused on established
cooperatives and co-op supporters is in the making, which
will make the fund more effective.
Getting Loans
While banks do not have universal fixed loan requirements,
there are common items which most will consider when
deciding whether or not to approve a loan.
107
The Kagawa Fund for Student Housing Cooperative Development is
managed by Shared Capital Cooperative, and can be found at:
https://sharedcapital.coop/borrow/kagawafund/


Loan Applications
The loan application is, essentially, a summary of all of the
development data obtained or created through the
development process. The basics of the application are as
follows:

● Official description of the organization
○ Organizational Mission, purpose, and goals
○ Articles of Incorporation
○ Bylaws
○ Current list of officers/legal decision-makers
○ Any Tax-exempt certification
● Purpose for the loan
● type of loan
● property information: value, condition, and existence
of liens, or debts owed
● demonstration of a good plan showing the
organization’s ability to pay the loan back

The loan application should also include a business plan
that articulates the next three to five years of operation,
taking into account details such as inflation, future
maintenance needs, etc. This type of Budget is called a Pro
Forma.108 Most of the information for the business plan is
generated in the financial projections, so it is not difficult to
put together. In the Pro Forma, banks look at how much the
108
Pro Forma:
144

organization budgets for reserves. Safe annual reserve
budget numbers are as such:
● 2% of the annual budget should be set aside for an
operating expense reserve,
● 3% for a repairs and replacement reserve, and
● 5% percent for a vacancy reserve.
This means that the banks will be looking for a net income
of at least 10% so that the co-op can meet its reserve
targets.

Another target that the banks will evaluate your loan
application on is your Debt Service Coverage Ratio, or
DSCR. This ratio is calculated as follows:

T otal income af ter expenses & Reserves, excluding Debt Service
DSCR = T otal Debt Service

A DSCR of 1.0 means your co-op has exactly enough
income after operating expenses to pay its debts. This
would mean there is no padding or wiggle room in case of
unexpected expenses. A ratio below 1.0 means the co-op
does not have enough income to pay its debts. A ratio of
much higher than one (like 2+) means that the co-op is
making significant income. Most banks will not approve
loans to cooperatives with a DSCR below 1.25.

The amount of information that banks require for loan
applications makes them fairly detailed documents. The
bank is in the business of loaning money and has a long list
of specific requirements; loans from other sources will likely
require a lot less information. When lenders are treated in a


professional manner, they are likely to feel better about the

loan. While this may seem inconsequential, lending
decisions (to an extent) are based on a subjective intuition,
in addition to the financial details of the project.
Loan Evaluation
Once the loan application is complete and submitted to the
bank, the application will be evaluated by a loan committee.
A loan officer from the bank will be assigned to the project
and will be the main contact during the loan evaluation
process. They will take the application before the loan
committee, which will evaluate it on the aforementioned
criteria. The loan committee, through a loan officer, will
probably want additional information which can be supplied
by the organizing group, NASCO Development Services,
real estate agents, building appraisers, and housing
inspectors. The committee will then make the decision to
approve or deny the loan.
Closing the Deal

The day on which someone actually purchases a building is
called Closing Day.109 It is the day when the title to the
property is transferred from the seller to the buyer. It is not
the same as the day in which the members move-in or “take
possession”110 of the property. Possession of the property is
sometimes arranged before or after Closing Day.
109
Closing Day: When the buyer and seller sign the papers
officially sealing the deal, and ownership of the property is
transferred
110
Take Possession: physically establishing ownership of the
building.
146

The closing normally occurs at a title company, which is a
firm that specializes in property transfers. They are
responsible for preparing all the relevant documents and
issue the Title Insurance111 that guarantees the buyer gets
title to the property. There are a number of people present
at the closing, including:

● seller
● co-op member
● NASCO Development Services staff
● lawyers of both parties
● real estate agents
● representatives from the lenders
● other parties, such as the building inspector or
appraiser

Sometimes there will be an independent lawyer who is there
to coordinate the affair and draw-up some of the title
transfer documents. Papers are passed around and signed
by both parties. This is the time when the down-payment to
the bank is made, consisting of member shares and
subsidiary financing. Usually the contractors and lawyers will
receive fees for their services at this meeting and
lending-related fees will be paid. Others involved will inform
the buyer of when they expect to be paid.
111
Title Insurance: a form of insurance that protects against
financial loss from discrepancies between the title and the
real property.


Closing day is a cause for celebration! It’s the day when the
co-op can finally say “We Own It!” It is also the day when
much of the work of establishing the co-op in the building
begins.
Other Property Acquisition Strategies

The NASCO Properties Option
Rehabilitation
New Construction

The NASCO Properties Option

The primary strategy outlined in this chapter for acquiring
property independently in order to start your cooperative is
seen by many in the movement as the most desirable
development process. However, it is still based upon the
support of traditional banks for the mortgage portion of the
finance package. Not only is such support not always
available, but there are some downsides to this. In fact,
most cooperatives that are unable to overcome obstacles
they encounter are those that remain entirely independent.
While there are benefits to being entirely self-owned, there
are also benefits to being self-governed, but with access to
a larger support structure.

148

112
NASCO Properties, a tax-exempt non-profit organization,
was created for the purpose of saving an existing student
cooperative from financial ruin. The Inter-Cooperative
Council in Austin113 (ICC-Austin), Texas was suffering from
the effects of a real estate crisis caused by the Savings and
Loan scandals of the late- 80s, and NASCO Properties was
created to purchase one of their buildings to provide a
much-needed cash infusion to the ICC-Austin. After
purchasing the title to the property, NASCO Properties
leased the building back to the ICC, and the co-op
remained controlled by the ICC. In addition to saving an
existing co-op system, NASCO Properties was created for
the larger purpose of addressing the mortgage finance
barriers faced by organizing groups.

NASCO Properties’ creation in 1988 was immediately
followed by the provision of assistance for an organizing
group in Chicago in 1989. The group had been unsuccessful
in finding conventional financing, even with the help of the
student cooperative movement. This problem was resolved
by NASCO Properties purchasing one building, eventually
followed by two more, and leasing them to the local
cooperative.

112
NASCO Properties: A 501(c)2 property holding
organization is a “co-op of co-ops” where each member
co-op shares equity and governance with the others.
https://www.nasco.coop/nasco-properties
113
Inter-Cooperative Council in Austin: A multi-building
student housing cooperative in Austin, TX.
https://www.iccaustin.coop/


NASCO Properties’s board is mainly composed of members

of each of the co-ops which lease buildings from NASCO
Properties, to make sure that NASCO Properties, as a
“landlord”, makes decisions with the needs of the member
co-ops in mind. Each of NASCO Properties’s member
co-ops have their own board, their own mission, and their
own policies, allowing for the co-op to operate
independently as though they owned the building, but still
have access to a larger network of support. NASCO
Properties also holds 3 board meetings per year, and these
meetings are generally hosted by the NASCO Properties
member co-ops, allowing house members and NASCO
Properties board members to meet and “talk shop”, leading
to an information exchange between the co-ops.

As of 2019, NASCO Properties owns 16 student and
non-student properties across the country, with the
intention of assisting organizing groups unable to access
conventional financing. The organization seeks to empower
the local co-op to the point that it is able to purchase
property on its own. NASCO Properties has a commitment
to helping member co-ops expand, whether they decide to
do so through more NASCO Properties owned buildings, or
through savings that allow them to purchase their own
properties.

As NASCO Development Services and NASCO Properties
are cooperative development organizations, they are
committed to overcoming financial barriers and making
projects work by any means necessary. The philosophy is
that, as much as possible, cooperatives should expand due
to their own efforts. Yet, due to financial challenges
experienced by new cooperatives, total autonomy is not
150

often possible, and tools such as NASCO Properties are a
valuable alternative.

New Construction
Another strategy for establishing a cooperative is new
construction. The construction process is dramatically
different from purchasing existing housing stock, involving
elements such as hiring an architect for design, agreeing on
design, hiring and advising a construction firm, obtaining
building permits, and so forth. However, there are
similarities as well: primarily, obtaining financing. While this
handbook focuses on purchasing buildings, new
construction is, in many cases, an effective means of
providing community-oriented, affordable housing.

Sometimes organizing groups decide that the buildings in
the local market are not conducive to the type of
cooperative they want to start, which traditionally requires a
large capacity to maximize the group’s labor power and
create an economy of scale. In a way that is similar to
co-housing, which incorporates the concept of
resident-developers, new construction gives organizers
democratic control over the design of their future home.

Constructing a new building allows the group to create a
structure that enhances their objectives. Such a design may
include a centralized food area, plenty of common space for
hanging-out, private dwellings for alone-time, and thick
walls for study-time. It is difficult to find a building in the
private market that incorporates all the right elements for
cooperative life. New construction provides an ideal basis
for a healthy community. New construction also provides an
opportunity for experimenting with new innovations in


ecologically sustainable design methods. Conventional

housing development is often based upon leveling
undeveloped land and building new structures with
unsustainable methods. New (or not so new) environmental
design methods incorporate concepts such as energy
efficiency, recycling of waste, community gardening, bike
storage, solar, and wind energy.

Relief in Tight Markets

One advantage of new construction for both student- and
community-based co-ops is that the construction will
provide new housing in a tight market114. Added perks are
that this housing is likely to be of higher quality than either
quickly built suburban homes or deteriorating urban
housing stock, that the co-op will be more responsive to the
needs and hopes of the residents than other types of
housing, and that the building is likely to be done in a more
sustainable way than the average new home. Even in cases
where green building methods115 are not emphasized, the
way in which co-op members use the space tends to be
much more efficient in terms of waste produced and
water/energy used than most other forms of housing.

In the case of university-dominated areas, a large student
population can affect the housing market in negative ways.
For instance, if a new university is built or enrollment is
114
Tight & Loose Market: A qualitative measure of how competitive a
housing market is. A tight market will have few purchasing opportunities
and high prices. A loose market will have many purchasing opportunities
and low prices.
115
Green Building Methods: Building methods designed to
minimize environmental impact either immediately in
construction or over time in operation.
152

increased and new student-friendly housing is not
constructed, then students, who then rely upon the local
market, have a negative impact on local non-student
renters. In classic economic terms, an increase in demand
without an increase in supply will drive the price of housing
up and make life difficult for low-income tenants. By
constructing new housing for the student population, the
co-op can help keep affordable housing available for the
non-student parts of the community, while helping its
members avoid the poor conditions that landlords often
force on students.

For organizing groups motivated by the provision of
affordable housing, new construction is sometimes more
socially-responsible than purchasing existing housing stock,
depending on the situation in your city. One reason for this
is that by creating more housing, the impact of students on
the local community is lessened, non-student-specific
housing is freed- up, and a downward pressure is exerted
on the local market. This is what makes cooperatives
beneficial to the entire community. Furthermore, new
construction allows for the maximization of space.
Affordable housing is different from housing designed for
middle- or upper-income people in that the former is
densely populated, and the latter is low density.

Subsidies
A final justification for new construction relates to the
previous subsections. Because they have the potential to
improve the accessibility of higher education, the larger
community, and the well-being of the planet, new
construction projects are more eligible for public and
private subsidies than purchased property. There are,


however, often funds available for rehabilitating buildings in

deteriorating neighborhoods, so it is worth finding out what
the funding options are at your local housing non-profit.

City governments are sometimes interested in providing
affordable housing to low-income people. Because
cooperatives indirectly benefit low-income communities,
cities may be willing to provide low-interest loans or grants.
Likewise, universities are often responsible for providing a
certain amount of student housing and may be willing to
provide loans or land subsidies116 to fulfill this responsibility.
As consciousness of the environmental destruction of the
planet becomes more widespread, private foundations and
other funders are more willing to support innovations in
sustainable design. While sustainable methods can be more
costly than conventional development, a grant to subsidize
the project could even things out. A cooperative project
might be attractive to funders because it involves young
people learning about alternatives, who, in turn, will
incorporate such lessons into their lives.

One criticism of new construction is that when all the costs
are added-up, the project is not feasible unless it is
subsidized in some manner. This support may come in the
form of low-interest loans, grants, or university land at no
cost. Thus, before a group invests too much time and hope
into a project, the first step is researching the available
programs.
116
Land Subsidy: any decrease to purchase price provided
by a government entity that allows land to be sold below
market rate.
154


Step 5: Begin Operating the New

Co-op
Preparing for the Transition to Cooperative Management
Interim Management
Cooperative Management
Financial Management
Membership Management
Member Education
Maintenance Management
Cooperative Vs. House Management
House Management & Labor Systems
A Living Entity

New challenges arise once the co-op owns the building.
Just because the building is purchased doesn’t mean that
it’s suddenly a functioning co-op. There are many tasks in
between that will keep the new co-op busy. Some of the
responsibilities are geared towards preparing the
cooperative for the members, and others take place after
the cooperative has opened. This work can make the
difference between a smooth first few years and a period
that is muddled with problems.
156

Preparing for the Transition to Cooperative

Management
Once a building is secured, organizers should begin
scheduling the tasks needed to prepare for the opening. In
most cases, there will be several timelines all operating
simultaneously. To deal with this, try creating several
timelines from the present to a few months after the co-op
opens, one for each major area of concern. Once these are
all created, try to place them onto one large sheet of paper
or whiteboard. Consider taking the large display of all of the
tasks that need to get done and putting it somewhere
visible that your organizing group can refer to. This should
help to give an idea of what needs to be done at which time
and allows the group to decide how to divide up tasks from
week to week.

● Building renovation needs to be coordinated by a
person or committee to ensure timely progress.
Maintenance and renovations must be scheduled and
details on permits or zoning may need to be
resolved.
● Marketing has to be created and rolled out, Future
members should be recruited. Once the co-op
opens, experienced members should host an
orientation for newcomers to introduce them to the
organization, the cooperative movement, and make
them feel at home and empowered to help run the
co-op.
● Any additional funding has to be finalized.


● A cooperative management plan has to be designed

and implemented along with an interim plan during
transition.
● Any additional policies, bylaws, and contracts need
to be created.

There is a lot of work involved during the transition period.
So much, that it may not be realistic to expect volunteers to
handle it all. Many new cooperatives budget money to hire
a development consultant or temporary staff person to
coordinate rehabilitation, management, recruitment, and
volunteers. Someone whose schedule is freed-up, is
accountable to the co-op and NASCO Development
Services, and can focus on getting the work done increases
the chance of success. In this case, an oversight committee,
in addition to volunteering, can supervise that person.

The project will be on a tight schedule with hard deadlines.
If the co-op must be ready to open by the beginning of the
school year, or other lease period, organizers may have to
hustle to stay on time. Failure to open on time can easily
cost the project tens of thousands of dollars in lost revenue.
It may be necessary to create a committee to make timely
decisions about rehabilitation, interim management, and
member recruitment. Having regular meetings through this
period is crucial. Most groups at this point meet at least
once per week, with many more emails, phone calls, and
lunch-dates filling the gaps in between. This is the most
challenging period, but your co-op is closer to home every
day.

158

Interim Management
The members of the new cooperative might be ready to
occupy their building immediately or soon after purchase.
Often, there will be time between the purchase and when
the building is ready to become an actual cooperative
household. If the building will not be operated as a co-op
right from the start, organizers must devise a system to
manage it in the interim period.

It is easiest to start a co-op in a building that is currently
vacant. However, if there are people living in the building,
there will be a period where the co-op will be transitioning
between a rental and cooperative management. The
tenants will still be living there during this time, and the
co-op will have to fill the role of their previous landlord.
During this period, the co-op will need a plan for the interim
management of the building. This plan will depend on the
length of the current tenants’ leases, and what is best for the
co-op members.

One of the primary decisions during the interim period is
what to do with the current tenants. Will they be asked to
leave so the organization can start anew? Will they be
invited to join the co-op? If your co-op would displace
people, then your co-op could easily be a force of
gentrification. Often tenants have been living in a building
for a long time. That building is their home. The prospect of
leaving can produce feelings of sadness or anger, which
necessitate sensitivity in dealing with the situation. If the
tenants have a long-term lease, the co-op may be legally
required to allow them to stay through its end. The


decisions that organizers make in these situations depend

almost entirely on the context from which the issues arise.
Whenever possible, offer current residents the chance to
join the co-op, so long as they join under the same terms
and contract as every other member.

Another issue to deal with is collecting rent during the
interim period. As the new owner of the building, the
cooperative is responsible for paying the mortgage
payments. No mortgage payments can be missed. This
requires ensuring that the tenants are paying the correct
amount of rent. The co-op should also start planning
immediately for other essential payments, such as property
taxes. Property Taxes can be a very large bill, but will
generally only come due once or twice per year.

Organizers should be clear with tenants about when they
are scheduled to move out. Standards for maintaining each
room and cleaning it upon departure should be enforced by
the interim manager(s). Security Deposits are usually
transferred from the previous owner to the co-op on the
closing day. Each resident put those forth upon entering the
building. Those need to be available to be returned once
rooms and debts have been cleaned, which is usually one
week to one month. Money should be subtracted for
damage done to the rooms and cleaning that was not done.
The residents should not be allowed to subtract their last
month’s rent from the deposit, as this money may need to
be used to cover other expenses. If there are no
subtractions to their deposits, the co-op must promptly
return the money. There are legal consequences for delay.

160

Interim management may not feel very “cooperative” for
the organizers. Members may feel like they are sacrificing
their moral principles by playing the role of a traditional
landlord. If so, reevaluate the interim management program
to meet those moral principles. However, each of the tasks
listed above is part of any property management program.
Members will need to handle the same tasks once they
begin managing the building as a co-op. The primary
difference is that interim residents did not choose to work
with and support a co-op as management. This can cause
friction as long as you have interim residents.

Cooperative Management
Cooperative Management Plan

After any interim period, the cooperative will now be able to
begin self-management. Effective management is essential
In order for the co-op to be successful. Management works
best with clearly written plans and expectations of who does
what. Therefore, the cooperative should draft a
Management Plan to ensure that all members can
understand how management will work in your co-op. There
are a few major necessary components to any cooperative
management plan. These are:
● Finance
● Maintenance
● Education
● Membership
The cooperative will need at least one person assigned to
ensure that each of these parts of the co-op is operating. A
failing in any one of these can cause major problems for the


new co-op. Each person entrusted with ensuring that these

parts are running does not need to be the person who does
all the work. They are there to ensure that the required tasks
are done. Some cooperatives even contract out
management to third parties, but that can come with costs
enumerated later in this chapter.

Additional components of the management plan should be
added as time goes on. The plan should be a living
document, tailored to fit your cooperative.

Member Participation
On the broadest level, members control the co-op by
participating in committees and the Board of Directors.
However, that method of participation can often feel
intangible. To provide other ways to contribute, most
group-equity housing co-ops require labor hours from their
members. Members can reduce costs by providing routine
custodial, administrative, and maintenance labor. While
member labor is common in co-ops, it is not universally
required. Without volunteer member participation, however,
the co-op becomes much more expensive to run. If staff do
all the work, member commitment to the co-op often
declines, and a transactional relationship develops. This
leads to a loss of member education and understanding of
member control. With member labor, participants develop a
sense of collective investment. An environment of learning
and member control develops a strong sense of community.
Member engagement in the business of the cooperative is
what makes co-ops thrive. Such participation is an essential
part of ensuring the success of housing cooperatives.
162

Staff Continuity
The average length of time a member lives in a
group-equity cooperative is 2-1/2 years. Student co-ops
often have even shorter turnover periods. This can lead to
loss of institutional memory and a tendency to reinvent the
wheel. Hired staff or affiliates with a university can bring
experience, expertise, and continuity. Long-term
perspective is especially valuable in the areas of
maintenance and finance. With skilled staff, the cooperative
can maintain its properties in good condition and remain
financially healthy without putting undue burden on a
membership base that may not have the time or resources
to volunteer for all of these tasks. Without long-term
management, especially in co-ops with high turnover, the
cooperative can lose skills and continuity and may wither
away into nonexistence. While co-ops need to keep the
buildings fixed and the accounts positive, they must also
maintain member control. Good managers must understand
this balance. Their role is to provide guidance to and
implement the will of the membership. They must empower
and support the membership to develop a shared vision
and will. It is in the co-op's best interest to have a clear
contract with anyone hired for these services. Delineate the
relationship between staff's responsibilities and the
cooperative's in such a contract. This understanding helps
prevent staff capture of the organization.


Financial Management
Standards for Co-op Finances

Cooperatives must meet a few basic financial standards
when operating. NASCO has found some that universally
apply to group equity co-ops. Your co-op may be more
stringent than these, but should not be less. A co-op should
keep track of its income and expenses, and follow Generally
Accepted Accounting Principles, or GAAP. The co-op
should be able to produce 3 basic accounting statements at
least quarterly (every 3 months). These are the Statement of
Activities, Statement of Financial Position, and Statement of
Cash Flows. The Co-op should have a balanced budget, and
stick to it. In the co-op’s budget, a minimum of 5% should
be allocated for vacancy/non-payment expenses. A standing
target of a minimum 1.25 DSCR should be maintained.
While the co-op does not have to have that DSCR at all
times, if below, the co-op should be planning to reach that
target. The co-op should put in place fraud prevention
controls. These should include policies or systems that
ensure that more than one person is able to see the
accounts. If the co-op has any additional requirements
placed upon it by lenders or local law, it must comply with
those as well.
Keeping the Co-op Financially Accessible

The Rochdale Principles state nothing about financial
accessibility. National and transnational corporations sell
merchandise at incredibly low prices. However, many do so
by paying their employees poorly, or relying on cheap labor
and materials in other countries.
164

Cooperatives are generally subject to the same market
conditions as other businesses. There is no mandate that
cooperatives' prices be lower than that of the competition.
The co-op will have to compete with other forms of housing
out there. If the co-op is wildly more expensive than
surrounding apartments, it will have a difficult time finding
members. If it is wildly cheaper, it may have difficulty
providing for needed repairs.

In housing co-ops, a room may cost more per square foot
than an apartment, but will also often include other perks.
Meals, utilities, laundry, and spacious commons more than
make up for the price difference. Co-ops should be careful
to note that while those amenities don't cost money, they
aren't "free." The labor of members is usually the source of
this added value. The real value of the co-op should be told
to prospective members up front: the co-op offers things
that other forms of housing do not.

This is why it can be helpful to think about "value" instead
of "price." Cooperatives often make conscious decisions to
pay their employees fairly, provide higher quality goods,
buy local, or achieve other social goals. This can lead to an
increase in price, but a greater increase in value. The
sustainability of the cooperative, the co-op’s ability to keep
money circulating in the local economy, or services added
all increase the value.

Members may find savings from the co-op's non-profit
nature, through increasing the density of people in the
building, and the use of member labor and group


purchasing. However, due to the expensive nature of

purchasing property, most new housing co-ops open near
market rates. Fortunately, fixed-rate mortgage payments
remain constant over the term of the mortgage. Thus, due
to inflation, the co-op’s mortgage can become lower in cost
over time. The co-op still has to raise the rent every year or
so to keep up with rising external costs, but that the rents
can go up more slowly than will the surrounding housing,
which makes the co-op a better value over time. In the
meantime, the co-op members are building equity for the
co-op's future. Over time, this makes it possible for the
co-op to expand, pay for improvements, and keep rents
affordable for future members.

Affordability means different things to different people.
However, housing industry accepted standards117 for
‘affordable’ cost for housing are that ⅓ of a person’s income
can be spent on rent and utilities. A person spending more
than ⅓ of their income, on rent/utilities would be considered
‘rent-burdened’. Rent-burdening members is not only bad
for them, it is also bad for the co-op, as those members will
be more likely to miss payments. This damage to the
co-op’s cash flow could mean missed mortgage payments
or worse. Therefore, it is in everyone’s interest to target
member charges to be an amount that is affordable. HUD in
the USA and CMHC in Canada provide data on area median
income, which can help the co-op set rental rates to be
117
USA: HUD
https://www.huduser.gov/portal/datasets/fmr.html
Canada: CMHC
https://www.cmhc-schl.gc.ca/en/data-and-research/data-tab
les/rental-market
166

affordable to certain income levels. Most Very Low Income
affordable units are affordable to people making 30% of the
area median income. This means that the rent amount
would be ⅓ * 30% of the Area Median Income. Most Low
Income affordable units are affordable to people making
80% of the Area Median Income. For students, affordability
may not be measured in income levels, but in how much
available money they have to spend (usually including
parental contributions).
Membership Management
Membership Program Purpose, Goals and

Standards
The primary focus of a Membership Program is to manage
who is and is not a member of the cooperative. Often in this
program are placed responsibilities relating to recruitment
and review of the current membership. As a co-op is made
up of its members, ultimately the success or failure of the
co-op will hinge upon being able to recruit and retain good
members.

Marketing & Recruitment Plan

Organizers should design a recruitment strategy. Successful
recruitment involves targeting people who are interested in
community living, having a direct say in their community,
and social change, not just affordable rent. Using public
cooperative education as a recruitment approach will help
the cooperative develop an enthusiastic and diverse
membership and a strong community presence.


A good place to start is to consider what the co-op has to
offer to potential members, which will influence which
portions of the surrounding community will be the most
interested in joining the co-op. What places would a likely
member frequent? What kind of publicity would attract the
attention of a likely member? What are unfilled needs in the
housing market that would gain the most interest?
Outreach Methods
● Word of mouth
The least expensive and most effective way of
spreading the word. Organizers should identify
friends and colleagues that might be interested and
personally invite them to join.

● Events
Contact and personally invite people who expressed
interest at any co-op events.

● Universities
Student organizations can often use University
resources to recruit members. One is the off-campus
housing office: advertising is often free. Another may
be a housing brochure that is distributed to incoming
students who are unfamiliar with the local housing
market. Taking the campaign one step further,
organizers should reach-out to both the student
community and the general public.

● Posters
Colorful, creative, and expressive of the co-op spirit:
pictures, quotations, descriptions, logos, and slogans
168

all help to achieve this. The visual element should be
underscored: large and provocative images draw the
viewer closer to take a more detailed look. The
poster should also tell someone looking at it a bit
about why the co-op is different from other options,
and why they would be excited about it. Posting in
community centers, tenants unions, and student
centers are excellent options.

● Website
usually the easiest way people can find out
information about your cooperative. Make sure that
information on how to become a member is clearly
posted on the site. Register a simple and memorable
domain name. Avoid “.com”, as this not only has the
fewest available domains, but also sends a message
that you are a for-profit enterprise. “.com” stands for
“.commercial”. Try either “.org”, which is very
inexpensive and meant for non-profits, or “.coop”,
which costs more, but has plenty of available names
and sends a clear signal that you are a cooperative.
Key Information for Prospective Members

● Cost
Include this in all outreach materials. The first
question that will be asked by potential members is,
“How much does it cost?” An initial cost projection
should have been created for the feasibility analysis.
Likewise, estimates for utilities and food should be
created if applicable. Your group should consider
how to best present this cost to interested persons.
Some co-ops use one price to represent all costs
incurred by members, including food, rent, utilities,
etc. Other co-ops break this out into several


numbers. Neither of these approaches is “correct”,

but one or the other may work better in your area.118

In either case, the key is for the co-op to make clear
what the members will have to put in, and what they
will receive in return, and to find ways to meaningfully
compare the value of living at the co-op with
alternatives in the area.

● Meal Plan
Food is an excellent catalyst to bring the community
together, but to take full advantage of this, everyone
should have a clear understanding of what they are
participating in. If the cooperative will have a meal
plan, prepare to answer the following questions: Is
participation mandatory? How many meals will be
provided each week? Will there be food at other
times? What type of member labor will the meal plan
require? What about members who cannot cook, or
handle food due to allergies or health conditions?
118
Some co-ops that use multiple numbers find that many
potential members want to “opt out” of the meal plan, and
only pay the rent portion. Most co-ops will not allow this, as
it erodes the economy of scale for the co-op and makes it
more difficult to plan future food budgets. Although
members “opting out” presents purchasing issues for the
co-op, the co-op should consider making some exceptions
(for example, low-income members who work in the service
industry may not be able to make mealtimes and receive
food at work). Other co-ops that use one figure to show all
costs for the co-op find that applicants have “sticker shock”
at the idea that a single room may cost as much as their
own efficiency apartment.
170

Will the meals be planned by one person, or by the
cooks? Will the co-op use a “food staples” list, and
base meals on that, or will the co-op get food on a
more opportunistic basis?

If there are ideological assumptions in the food plan,
make sure that they are discussed openly. For
example, vegetarian meal plans, “freegan” meal
plans, locavore purchasing, and other policies for
food may exclude some members from wanting to
participate or may make others excited to do so. In
deciding how to set up a meal plan, try to have an
understanding of why a decision is being made that
can be explained to future members, and remember
that the current members of the co-op are only a part
of the co-op, and that this decision could affect
potential members for years to come.

● Labor System
Prospective members must know about any required
labor systems in the co-op before they become
members. Ensure that the labor system is explained
clearly, along with the consequences for
nonparticipation. When explaining these systems,
remember to ask if the prospective member needs
any accomodations in order to engage in the labor
system. This is especially important for the co-op to
be inclusive of members with disabilities. Asking if
someone needs accommodations is appropriate.
Asking specifics about a disability is not. Often, the
co-op making allowances for applicants to engage in
the labor system is the applicant’s deciding factor in
choosing to become a member.


● Cooperative Membership
Cooperatives are not standard apartments. This must
be extremely clearly stated. Applicants must know
that they’re joining in on the management and
stewardship of the cooperatives, building, members,
and finances. They must know that by not having a
landlord, they’re assuming all the landlord’s
responsibilities. They should know what a
cooperative is, what it means, and why they’re
joining. If the fact that the organization is a
cooperative is not highly prioritized in outreach, the
co-op runs the risk of having many members who
consider themselves “renting from the co-op” and
develop a transactional relationship where they’re
mostly in the project for the cheap rent. This is a
difficult hole for a co-op to dig out of, so it’s better to
avoid it altogether through intentional recruitment.

Inclusivity in Recruitment
As you plan your recruitment, keep in mind where you may
be excluding potential members. For example, if all your
ads are online, anyone who does not have access to a
computer will be excluded. If the co-op uses mainly
word-of-mouth, then those outside your social network may
be left out. Using only flyers or tables at events limits your
applicants to the people who visit those locations or events.
Sometimes this “sampling bias” is intentional on the part of
the co-op. More often than not, that bias is a limitation of
the culture and experiences of the founding members. and
can be accounted for by thinking carefully about how to
publicize the co-op. When promoting your co-op, try to
avoid language that is jargon to a particular culture or
subculture. For example, when describing your meal plan,
172

try “nightly family-style home-cooked dinners with
vegetarian options” over “vegetarian dinners.”
Targeting Recruitment
Targeted Recruitment refers to reaching out to target
populations that the co-op wants to include. Word-of-mouth
advertising tends to attract populations that are very similar
to the current members of the co-op. Online ads, flyers, and
other outreach tools can be posted in locations where
target populations currently live, work, or congregate.
Consider posting ads in local community centers, or in
newspapers or on websites read by your target population.
Doing so can help to improve the diversity of background,
experience, and perspective that a co-op needs to thrive.
Fair Housing Considerations

While targeting in recruitment is acceptable behavior,
discrimination or making any housing decisions based on a
protected class is not. In the US, there are 7 classes federally
protected by the Fair Housing Act. These classes are Color,
Sex, Family Status, (Dis)ability, National Origin, Race, and
Religion. In Canada, Human Rights law is defined
provincially, but several classes will be protected
throughout. These classes are Sex, Marital and Family
Status, Race, Colour, Ethnic Origin, Ancestry, Place of
Origin, National Origin, Religion, Creed, Age119, (Dis)ability,
Sexual Orientation, Source of Income, and Political Belief.
Additional classes may be protected on the state/province
and municipal level.

Your marketing and recruitment plan must abide by these
119
Generally, Age is not protected for those under 15, and
some senior housing permits limiting to only those over 55.


considerations! Do not use these classes as even a partial

reason to deny housing. Additionally, discouraging
applicants from applying, or directing applicants to certain
units based on these classes is unacceptable. Intent does
not matter when it comes to fair housing complaints. Impact
does. If your marketing and recruitment plan
disproportionately affects one type of protected class, you
must adjust it. Periodically review your plan to ensure that it
is inclusive, not discriminatory.
Member Intake
Member Contracts
A good rule of thumb for member contracts is “no contract,
no key.” Member contracts, addressing the above
information, should be created. A standard residential lease
is probably not appropriate, although it’s a good start. Most
residential contracts have the same standard clauses, which
will protect the cooperative from legal or financial hassles.
Issues covered in a standard contract include but are not
limited to: damages, late payment charges, length of
contract, and so forth. NASCO Development Services staff
can also supply you with examples of member contracts
used by other co-ops around the US and Canada.

It is absolutely essential to note that member contracts are
provided to every person who plans to live in the building.
Without signed agreements, the cooperative may run into
difficulties holding members accountable for their
contributions, and the member may have difficulty holding
the cooperative accountable for its responsibilities as a
property manager. Clear legal agreements are essential to
good property management. There have been many
174

instances where people without contracts have stayed long
after the community of a cooperative wanted them to leave.
Contracts help prevent this, and protect both members and
the co-op.

The Co-op should designate a person to ensure that
contracts are issued and signed by both the co-op and the
member in a timely manner. This person is usually a
member (Frequently the membership officer) in smaller
co-ops, but as the co-op grows, this job is often assumed by
staff.
Member Share
If the building is purchased, part of the down payment was
likely a member share. Member shares120 function similarly
to a deposit, as deductions for damages or lack of
cleanliness are subtracted upon departure. How much does
the potential member have to put down? Will the share
appreciate in value along with the co-op's worth, or is the
share actually closer to a deposit? It is also very important
for your co-op to make sure that the policies regarding the
share or deposit comply with state and local laws regarding
deposits, which you can get from your local tenants’ union.
Member Tracking
A membership program should at least maintain a list of
who is and is not a member of the cooperative. At first, it is
usually obvious who has joined and is a member, but as the
months and years go by, it can become easy to lose track of
who has and has not retained the qualifications for
120
Member Shares: A member’s equity ownership stake in
the corporation.


membership. This is especially important when considering

who has the right to vote in the cooperative.

The cooperative should keep a file for each member with
basic information such as their lease, move-in date, payment
plans, and any contract violations. This supplemental
information is often valuable when trying to assess issues in
the cooperative.

If your cooperative has income or demographic restrictions
or targets, keeping this information on file as well can be
extremely helpful. It is one thing to say that the co-op feels
very white and queer, and another to be able to point to
long-term trends.
Member Departure
The co-op’s membership will need systems to handle
members leaving the co-op. Whether amicable or not, when
a member leaves, their contract must be closed in some
way. Those responsible for the membership program must
also ensure security deposits are returned to departing
members within the legally required timeframe. The process
by which members leave the co-op is just as important as
the process by which they join.
Member Education
In many cases, for both leased and purchased buildings, the
cooperative will need to recruit new members to fill the
empty spaces. However, it is important that potential
members understand the cooperative and what is involved.
Organizers should begin to think about the details of policy
176

and practice before recruiting begins; constructive dialogue
should be invested in the following issues:
Member Orientation
The fifth Rochdale Principle is “cooperative education,
training and information.” Member orientations are an
essential introduction to the organization and the
cooperative movement. They inform new members about
the co-op's operations, member responsibilities, and
cooperative principles. This is necessary information for a
new member to engage in the cooperative. Even if all the
initial members of the cooperative are your Organizing
Group, develop a member orientation program for those
who will come after you.

An orientation should be useful, enjoyable, and mandatory.
Most co-ops allocate three or four hours for this. Your
cooperative may wish to differ significantly. A few key tips
that enhance participation in cooperative education events
are:
● Have Food
● Make it Fun.
● Have both formal and informal time, to help
members get to know one another.
● Have a copy of the policies and bylaws readily
available.

An example of an orientation schedule is as follows:

Introductions


5:00 Round Robin: How did you find the co-op?

5:10 Agenda Review (display on butcher paper)
5:15 Round Robin: What is a cooperative?
5:25 Cooperative Principles
5:35 Cooperative Forms: consumer, worker,
agricultural, student/community housing, co-housing,
food, etc.
5.45 NASCO and NASCO Development Services
6:00 Project History, Vision, Mission
Break
6:15 Dinner (eat during the orientation)
How things work, or could work
6:25 Governance: Board of Directors, house
meetings, decision-making process
6:40 Financial Structure: where charges go, when
they are due, etc.
7:00 Labor System: jobs and responsibilities,
7:20 Safe space discussion, discussion about
anti-oppression
7:50 Kitchen: meal plan, dishes, food system
8:00 House Tour

This sample orientation should be changed to suit a
cooperative’s specific needs. If the house is just opening,
policies likely will not be finalized, and not everyone will
know where things are kept. The idea is for old-timers to
make the newcomers feel welcome and to give them a
sense of history and ownership. Educators should consider
178

where new members are coming from and what would be
useful to know. Good orientations have flexible schedules,
clear goals, plenty of room for questions, and a festive
atmosphere.

Orientation will be many people’s first time learning about
the cooperative movement. Don't worry too much about
covering absolutely everything about co-ops in Orientation.
Instead, make sure that members know that cooperative
education is an ongoing process. Provide resources in a
library, on a website, or in a handout for further research.
NASCO has many educational materials and resources on
their website.121 (pamphlets, books, videos) These can help
frame the cooperative movement.

Orientation should go beyond providing information about
the cooperative. It should inspire new members to become
involved and make a difference. An empowering orientation
will help make the house a successful, democratic
household.
Member Support & Continuing Education

Many cooperatives lump member support services under
“membership” However, the kind of initial support most
members need is often best sought from an education
program. Members often need help figuring out what
support services are available to them within the
cooperative, and how to engage with those services.
Members who need financial assistance may not know
where to get payment plans. Members needing physical
121
NASCO Resource Library: https://nasco.coop/resources


accommodations may not know who to reach out to. Those

who want to make changes in the co-op will need to
understand how to engage with the decision-making
processes. Even conflict mediation and resolution services
are generally based in unlearning systems of oppression.

Providing safe spaces can be part of a membership
program, but membership would usually only get involved
with the mechanics of removing people from the
cooperative or rehousing them appropriately.

Education is not a one -time activity. Regularly, the co-op’s
member education plan and programming should be
evaluated to ensure that not only do new members receive
orientation, but that continuing members receive timely
continuing education.

Maintenance Management
Owning a building quickly teaches one that buildings
degrade over time. As the co-op has invested likely
hundreds of thousands of dollars into its buildings, and they
make up the basis of the housing that the co-op provides to
its members, it is essential to protect that investment.
Having a maintenance plan will help prevent major
problems down the road, and will likely save significant
amounts of money. A maintenance plan should have 3
major components: A plan for repairs, a plan for major
projects/improvements, and standards for habitation.
180

Repairs
Repairs are the most basic part of building maintenance.
They focus on minor fixes to the general wear and tear that
a building faces through normal use.
Whenever possible, use skilled labor to make repairs in your
building. Often, municipal and state codes will require this
of anyone working on a multi-family residential building.
Repairs should generally be done in-house if the co-op is
able to do so. Having a skilled repair person on staff, or a
skilled member to do general repairs is an excellent way to
both ensure quality work and control costs.
Contractors can be very useful when attempting to fix things
that are out of the scope of member or staff skill sets. Often,
these professionals will allow you to watch and learn how to
make the repairs that they do. This allows the co-op to not
have to hire out repairs every time.
Repairs should be budgeted for on an annual basis based
on past expenses. Each type of building and location will
have different individual carrying costs, so as time goes on,
your repair estimates will become more accurate. Repair
costs are considered expenses when they’re below a certain
threshold that your co-op may set in its financial policies.
(usually ~$2500)
Capital Improvements & Major Project Planning

From time to time, the co-op will need to make major
reinvestments in its properties above the repair expense
threshold. These are considered Capital Improvements, as
they are major reinvestments that raise the value of the
building. (Small repairs like fixing a few light switches don’t
really affect the value of the building.)


A way to understand this is that a building with a $25,000
brand-new roof is now worth $25,000 more than it was
when it had a 25-year-old broken one. In 25 years, we can
assume that the new roof will be right where the old one
was, broken and in need of replacement. Thus, in 25 years,
the roof will be worth $0. Each year, the roof is worth $1000
less. This loss of value (without spending any cash) is called
a “Depreciation Expense.”122 A Capital Improvement raises
the value of the building to counteract this depreciation.

Depreciation is calculated according to a number of tables
that can be found on the IRS website123 in the US, or the
CRA website124 in Canada. In both cases, you will want to
speak with an accountant about quantifying your
depreciation.

When budgeting for Capital Improvements, look at how
much depreciation you are planning for, and try to budget
for at least that much in reinvestment. This will help ensure
that the buildings that you’ve invested in do not devalue.
Likewise, prioritize projects that will have lasting value, or
that will protect other parts of the building. A roof is a good
122
Depreciation only applies to the building, not the land.
So landscaping is not a capital expense, it’s just a regular
expense.
123
IRS Depreciation Schedule Page:
https://www.irs.gov/pub/irs-pdf/p527.pdf
124
CRA Depreciation Schedule Page:
https://www.canada.ca/en/revenue-agency/services/tax/busi
nesses/topics/rental-income/capital-cost-allowance-rental-pr
operty/rental-classes-depreciable-property.html#buildings
182

example of a capital improvement to prioritize, as it not only
is a reinvestment, it also prevents further rain damage to
other parts of the buildings.

Standards for habitation

Just because the buildings aren’t falling down doesn’t mean
they’re in good repair. The maintenance program must
ensure that the cooperative meets all local building and
safety codes for the type of multifamily building(s) you are
operating. Some basic universal minimums are that all
bedrooms must have smoke detectors, all individually
rented rooms must have operating locks, outlets must not
be painted over, windows must operate properly, and
insulation must be adequate. Having a building inspection
done is a great way to ensure that your buildings are safe
and adequate homes for your members. At least annually, a
qualified individual should walk through all rooms in the
cooperative and assess them for habitability.
Cooperative vs. House Management

There should be a demarcation between what jobs are done
on the house level and what are done on an organizational
level.
House Management & Labor Systems

It may be tempting not to systematize the cooperative and
to rely on the trust and good will of each person. However,
there are benefits to creating a labor system that is
accountable to the democratic will of the group. The labor


system can be very empowering for the membership, if

everyone gives input into how it will be structured. This
means that the job descriptions, the division of labor,
scheduling, and the labor assignment process should be
transparent to all, and open to member feedback.

How many hours and what kind of work is expected of each
member? How will the co-op hold members accountable for
their required work contributions? How will the labor system
distribute different types of work i.e. chores, cooking, and
leadership positions? Will the labor system account for
gender when distributing work among members? How will
the labor system account for class differences amongst
members i.e. members who must work full-time as students,
members who work multiple full- and part-time jobs etc.?
What happens to the labor system when there are
vacancies? How will the co-op accommodate members with
different ability levels, and who may not be able to perform
the tasks that are currently open to them? The meal plan
usually requires the bulk of the work in a group housing
cooperative.

One benefit of creating a labor system is that the group
does not have to reinvent the wheel if many members leave.
Another is that a consistent schedule for all the necessary
chores helps members be clear about their obligations. It
also helps let members know if a job is not being done. The
biggest benefit is that a defined labor system gives every
member the chance to try different roles. This lets the
member find the jobs that work best for them. Trying
different jobs also gives members a better idea of how their
co-op functions as a whole.
184

Fundamental Work
Determining what work needs to be done on a regular basis
is fundamental to the smooth functioning of the household.
Fundamental work probably includes each of the following:
cleaning the bathrooms, the kitchen after meals, and the
common areas; preparing meals; maintaining the outside
grounds; taking out the garbage and recycling; performing
regular preventative maintenance, and so forth. It is also
nice to have jobs that change from term to term to
encourage new ideas. Whether or not to count serving as a
Board member as labor is an important issue to be resolved.
Once a rough list of fundamental labor has been composed,
it is helpful to design job descriptions and estimate the time
and frequency required for each task. Often, job
descriptions are compiled in a folder and posted at various
locations throughout the house: officers in a central location
but others by their job location (bathroom cleaner in the
bathroom, cooks in the kitchen).

House Officers
Different co-ops have various labor systems, with details
tailored for their particular circumstances. While no two
co-ops are exactly alike, there is a common methodology
used in designing work systems. One aspect of a labor
system is the officer125 positions. Officers are servants of the
membership, and responsible for carrying out the intentions
of the co-op. They are not the bosses of one area or
another. This can be made clear in member orientations,
125
House Officer: Those responsible for facilitating the
decision-making work of the members in a co-op building.


and in any “Owner’s Manual” material you might create.

Your co-op can also try to create many officer positions so
that most members of the co-op have the chance to be an
officer. The following list is an example division of labor
between officers:

● Chair or President: The cooperative should have one
recognized representative. The responsibilities could
include planning and facilitating house meetings,
serving as a representative to the community and
Board, and checking-in with house officers.

● Membership Coordinator: This person would run ads,
keep track of contracts, help members pick their
room in the co-op, and is often a mediator in conflicts
between members.

● Treasurer: The treasurer collects member charges,
prepares a budget for house approval, pays the bills,
reports regularly on the status of collections, and
compares income and expenses with the projections
in the budget. The financial success of the
organization depends on the foresight and
communication of the treasurer.

● NASCO Representative: This person serves as a
liaison between the cooperative and
NASCO/NASCO Development Services, serving to
facilitate communication between the two groups. It
is easier for NASCO/NASCO Development Services
to work with a new cooperative when there is a
186

designated communicator. Often, this responsibility
is given to the president or chairperson.

● Food Steward: This person is responsible for
facilitating the purchase of the house food. The
steward’s responsibilities may include the following:
making the food budget, creating a shopping list
based on the needs of the cooks and the general
desires of the members, and purchasing food.
Furthermore, sometimes this person is responsible for
overall welfare and condition of the kitchen.

● Work Manager: The work manager is generally
responsible for facilitating the work schedule and
ensuring the proper completion of work assignments.
The manager may also be responsible for ordering
supplies, and assisting with scheduling special
projects, including work holidays, maintenance labor,
and recruitment activities.

● Secretary: Someone to take notes and compile
minutes for each meeting is an effective means of
facilitating house communication (for those not
present) and enhancing organizational memory (over
a period of time). The responsibilities of the secretary
might include: taking minutes, filing minutes, and
posting them in the bathroom or other prominent
area, keeping records of alumni, and forwarding mail
to former members.


● Maintenance Manager: This person oversees the

maintenance tasks of the house, coordinates other
maintenance workers, schedules labor as necessary,
and communicates with contractors. This position is
crucial to the long-term health of the building.

House officers can be elected by the members at the
beginning of each term or each year, as the positions open
up, or upon a schedule that the members create. Be aware
that too short a term limits experience, and can result in a
position never being done as well as possible. However, too
long a term prevents members from being able to run for
positions to get involved. Furthermore, it is useful to clearly
spell the responsibilities of each position in a house
constitution, which furthers a sense of identity and helps
things run smoothly.

Some of the house officers (president, treasurer, secretary)
may look similar to the officer positions on most co-op
Boards of Directors. However, there is a clear distinction
between house and organizational operations in
multi-house systems. In one-house systems, there is a
distinction on paper but rarely is there a distinction in
reality. For instance, the Board of Directors may be
composed of everyone and house officers become the
organization’s officers.
Equity in Labor
One of the objectives of a labor system is to balance the
workload so that each person has an equitable amount of
work. It is important to note that equality is not the same as
equity - some members may simply be unable to do the
188

same number of hours or jobs as others. Your cooperative
will have to address this issue. Some cooperatives use a
work credit system to balance this. They require a number of
work credits for each member to complete. They then
amount of work credits for each job based on the time
commitments and difficulty of tasks. Jobs that are not
considered very pleasant are often given extra work credit
as compensation (i.e. taking out the trash or cleaning the
bathroom). Other cooperatives base work credits on the
amount of time required for each job.

It is important to note that if your cooperative develops a
system that tracks labor, that you take note of whether or
not it is being fairly applied. Cooperatives can easily fall
prey to discriminatory use of job “strikes” or “missed hours”
as ways to target protected classes. [Race, Gender, Sex,
Disability, etc.] Take active steps to ensure that your systems
are equitable and applied consistently to all members.
Labor System Implementation

The implementation of the labor system begins with
establishing a process whereby everyone in the house is
assigned jobs. Different cooperatives have various
mechanisms for this: elections, lotteries, appointments, or a
combination. Different techniques stem from different
priorities and goals: for instance, a lottery system attempts
to achieve fairness by being totally unbiased. An
assignment, based on assessments of skills and preferences,
is better at matching each member up with something that
matches their abilities or schedule.


The implementation would not be complete without a

system for dealing with work-left-undone. It is usually the
work manager’s responsibility for acting on policies for
missed jobs. Usually, the co-op will have a clause in the
lease stating that members must comply with house labor
policies. The house should be clear about informing the
work manager when a job is considered undone and what
the procedures and penalties, if any, are. Examples of
penalties range from strict fines to a “wheel of misfortune”
that is spun randomly choose a make- up task: for instance,
scrubbing the oven, cleaning under the kitchen sink, baking
cookies, and so forth. The co-op should give members
every reasonable chance to find labor that works for them,
and to make up for labor that was missed. At the same time,
this labor is essential to the function of the co-op. If a
member feels that their contribution is not valued, or that
labor does not matter, then this is something that must be
resolved. If a member refuses to do labor, to the extent that
no remedy can be found within the house, the house must
be willing to evict the member if necessary.

In the early stages of implementation, the house will likely
run into unexpected problems. Members may discover that
no one is cleaning the basement or that the hallway is being
cleaned twice as often as is necessary. Or that being a work
manager is more time consuming than was planned for.
These problems should be resolved before each new term
and job descriptions should be revised as necessary.
Usually, these revisions are done by the labor manager, and
then ratified by the membership.
190

A Living Entity
At this point, you may begin to feel that the cooperative
starts to take on a life of its own. You may begin to feel that
you and your original organizing group are no longer
unilaterally calling the shots. You may begin to feel that the
new members have opinions and dreams for the co-op that
differ from yours. If you are beginning to feel this, then
congratulations! you’ve done it! you’ve started a co-op!

One of the beauties of cooperatives is that no one person
can own the entity. It is of, by, and for the members. That is
to say, just because you started it, that doesn’t make it
“yours.” When we say, “we own it,” we mean the collective
as a whole. remember that if you are a member of this new
cooperative, you have created something bigger than
yourself, that you will and have contributed to, that
hopefully will endure for decades to come.


The Future
Leadership Development
Development Culture
Movement Culture

Once a cooperative comes to life, a new set of exciting
challenges and opportunities begin. The project changes
from the work of getting the venture started to that of
building a strong organization and maintaining momentum,
and creating a timeline for those projects that will still need
to be done now that you are living in the co-op. You now
have the advantage of infrastructure, though, in the form of
being in the same place as your fellow organizers, having
regular meetings, having a stable address and phone
number, etc. There are actually many challenges that new
cooperatives will face that could not possibly be addressed
within this text. The final chapter focuses on three broad
areas new cooperatives should bear in mind as they are
setting the tone for the venture.

One is leadership development: efforts to develop new
leaders and disseminate knowledge will make the
organization stronger and prepare it for future turnover.
Building a culture of continuous development will create a
strong local network of co-op households, increase the
organization’s base of resources, and further its mission of
providing as much affordable housing as possible. Likewise,
maintaining a high level of participation in the cooperative
movement benefits the organization through the sharing of
resources and helps organizers in communities without
192

cooperatives. Proactive founders understand the serious
nature of these challenges, viewing them as opportunities
for growth and welcoming the future with open arms.
Leadership Development
After putting in innumerable hours of work, the founding
group inevitably would like to see their creation blossom
into a healthy community organization for years to come.
Perhaps one’s gut instinct is that this entity has come to life
and now we can sit back and watch it flourish. Perhaps, on
the other hand, the founders are worried that when they
leave, the organization will still be so fragile that it will fall
apart. While the actual situation is dependent upon the
particular circumstances, there are some actions that the
founding generation can take to help the cooperative thrive.

Perhaps the most basic factor is to remain a member of the
cooperative for as long as possible. Often, a crisis period (or
at least a challenging adjustment period) will follow when
the founding bunch goes on. With organizing experience, a
sizable list of student and community contacts, and
knowledge of the cooperative movement, founders are in a
position to empower new members by disseminating
knowledge and building a vision to guide the organization.
Founders might consider staying for at least a few years to
help get the organization on its feet. During this time, it is
important that the founding members allow new members
to replace them in critical positions, so that the rest of the
membership has a chance to try new approaches, but still
have the original community members around for input.


An ongoing issue in all cooperatives is the constant turnover

126
in their community. This turnover is built into the student
co-ops, as their members graduate. This also affects the
non-student housing co-ops, where many members may live
for a long time, but others might use the co-op as a
transitional form of housing. Turnover hinders the
organization by breaking continuity and weakening
organizational memory, and, at the same time, revives the
organization by providing new blood and ideas. The co-op
should aim to strike a balance between new members and
returning or more senior members. Often times the most
senior members hold the most power and influence in the
co-op, and tensions can brew from power dynamics and
more senior members resisting change in the co-op. Being
sensitive to turnover and seniority is crucial to maintaining
health group dynamics. Established cooperatives have
addressed this potentially devastating problem turnover
issues by hiring staff and budgeting for cooperative
education to train new members. However, a new
cooperative does not have those resources, and therefore
should address the problem from another angle: leadership
development.

One approach to leadership development is touched upon
in the previous chapter: member recruitment. When
recruiting, founders should target a specific kind of member:
those who are already involved in community projects or
community activism. These folks, who understand they can
make a difference in the world, are ideal because in a
cooperative, solving problems and running the organization
126
Turnover: The process by which members move in, move
out, and are replaced by new members.
194

is not a landlord’s responsibility, it is dependent on the
members. That is a concept that not everyone is going to
pick up right away.

Of course, co-ops have an obligation to practice open and
voluntary membership practices as one of the cooperative
principles, so “activism” should not become a litmus test for
whether a person is admitted to the co-op, and organizers
should try to balance encouraging members who will
already be engaged with providing opportunities for anyone
to come and get engaged. One of the most inspirational
parts of being involved in a new cooperative is watching
“normal” people become passionate about the work that
the co-op is doing and teach themselves skills they never
expected to have. The best solution for a co-op is to
practice leadership development by both inviting people
who already show leadership skills, and by developing the
“leader within” from people who are interested.

Another important angle to approach leadership
development is ensuring that traditionally underrepresented
and marginalized voices are integrated into the co-op's
leadership. On campus or in the community at large, there
are often people who are excluded or underrepresented in
decision-making bodies. Underrepresented groups often
include people of color, people with disabilities,
transgender people, queer people, and international
students. It is important for the co-op to be aware of the
demographics of its leadership and use an anti-oppressive
approach to empowering marginalized voices into
leadership. Note: the co-op also must be aware of tokenism,
which is often associated with “affirmative action” policies
where there is little analysis around oppression. To avoid


this, the cooperative should actively seek the input and

expertise of people with marginalized identities, and not
merely add their bodies to a committee or board to meet a
quota.

Another approach to leadership development is cooperative
education. An empowered, enthusiastic, and informed
membership is fundamental to making good organizational
decisions and maintaining a proactive vision. A thorough
education program includes the following:

● educational materials: cooperative books, an owner’s
manual, directory of local cooperatives
● orientation: see previous chapter
● retreats: problem-solving and visioning getaways for
those interested in improving the co-op
● one-on-one: officers should train future officers and
work together as a team
● co-op conferences: regional and binational
educational gatherings
● tours: regional and local tours of other cooperatives
● networks: making friends in other cooperatives and
learning from their experiences
● meta-meetings: a chance to discuss how your own
process for meetings works, and how to improve

The opportunities for cooperative education should be
planted firmly into the organizational culture and
operations. An education committee is an effective means
196

of organizing events and maintaining a focus and healthy
education budget. Such a committee should have its place
in the Bylaws.

Development Culture
Single-house co-op systems face challenges beyond their
fragility and lack of continuity. They face the problem of
isolation from other co-ops. Isolation is perhaps something
that a co-op suffers from without even realizing it. Members
of multi-house systems benefit from being constantly
reminded of the variety of ways that a co-op can operate
and that it is really just an organization that is defined by the
members, whoever they may be.

Steps should be taken to maintain the vision of a
multi-house cooperative system by building a culture of
development. Understanding the real estate market is one
means of achieving this culture: at times the market has
nothing feasible and then may suddenly offer up a fantastic
building. Establishing a development committee that is out
there looking at properties and keeping in tune with the
market is one means of creating a sense of readiness for
development. Other activities the committee can work on is
cultivating a relationship with the university and researching
city and county programs that could benefit the
cooperative. Much of this work is similar to organizing in
that it involves finding property and building support.

There are many benefits of expanding from a one-house
system into a two-house system or more. One is that it
creates a local network of co-op households that are


inextricably tied together. In addition to the friendships the

network provides, it also functions as a basis for further
community involvement.

Another benefit is affordability: as more buildings are
purchased by the cooperative and mortgages are paid-off,
the equity is reinvested into the organization making it more
affordable. This is often a crucial issue for one-house
cooperatives that have purchased their buildings with no
equity. Borrowing 100 percent of the funds to purchase the
building means that the average rent is higher than if the
organization had a 20 percent down payment. This makes it
difficult to compete with other housing in the private
market, even if the landlord is making a profit. As the co-op
builds a store of equity, reinvests it in the system, and
purchases more housing, a system of affordable housing is
created.

Growing your co-op system does not have to mean
purchasing buildings. Many co-ops use a hybrid
development model127 for growth, where some houses are
owned and some are leased, but all share some common
resources. This allows the co-op to provide housing for
more members and get a larger profile in the community
without having to wait until tens of thousands of dollars are
piled up for a down payment. This also allows each co-op to
create its own culture and emphasis but allows all of the
houses to work together to make the goals at the board and
general membership level a reality. By creating several
127
Hybrid Development Model: Using both purchasing and
leasing as means of development. Not tying the
organization to only one or the other.
198

houses, even leased houses, your group can collect a
modest development fee from each member to bring closer
the day when the co-op can buy a property for itself.

Developing more housing also creates a broader funding
base that allows the organization to hire staff. Needless to
say, it is difficult to run an organization with volunteer labor
over an extended period of time, especially as it gets larger.
Coordinating recruitment, finance, maintenance, education,
and development with volunteer labor is difficult to handle
in a stable fashion and often leads to burnout. Hiring a staff
person that is accountable to the democratic will of
members creates a more sustainable situation over the long
term. Staff members that understand cooperatives and can
relate to students, activists, or a younger demographic are
an excellent solution to the problem of turnover in housing
cooperatives.

A final argument in favor of maintaining the spirit of
expansion is that it is the mission of the student cooperative
movement to make higher education more economically
accessible by lowering costs. At the local level, student
cooperative organizations should seek to provide as much
affordable housing as possible. Many believe that all
student housing should be run as cooperatives: students
have the right to control their living environments! This
holds equally true for community co-ops based in a
non-student community, where all people should have a
right to livable and affordable housing, and a chance to be
represented in the decisions affecting their homes. It is the
co-op's responsibility to expand whenever feasible.


On the other hand, a valid argument against development is
that as cooperatives become larger, they become alienating
to the average member. In a one- or two-house system,
every member can have input into most of the major
decisions that are made. Everyone knows everyone else. It’s
a cozy situation. Many established cooperatives are large
and complex democratic organizations with a political
context and process all their own. It is easy for the average
member to feel excluded from the goings-on even if
opportunities for involvement are available.

Most of these organizations were created during the Great
Depression and are over 60 years old. Their organizational
cultures developed without any models to learn from.
Cooperatives that got their start during the 1960 and 70s
wave of development or getting their start now are in a
position to learn from the histories of their predecessors.
The challenge of the current wave of cooperatives is to
become a large cooperative, while remaining small: to
provide as much affordable student housing as possible and
retain a sense of empowerment through avenues of
member participation.

Movement Culture
Student and community cooperatives are a part of a larger
cooperative movement. The problem of isolation is not
totally solved by developing more cooperatives at the local
level, co-op systems should network with cooperatives in
other areas to learn about different modes of operation. On
a strategic level, in order for the movement to be successful,
it is necessary for the co-op to participate on the local,
200

regional, national, and international scales. Road trips, email
discussion groups, and educational conferences give
members the opportunity to interact and share stories,
problems, and solutions.

For cooperatives in student communities, which are affected
by high turnover rate, a movement culture128 should be
incorporated into the education program. When
experienced members graduate, they are replaced by new
ones who don’t necessarily know anything about the
movement. Cooperative education addresses this problem
by providing the organization with an avenue to learn about
the broader picture and cultivate a movement culture as the
years go on.

Cooperatives that consider themselves partners in a
movement are in a better position to practice the principle
of cooperatives among cooperatives. Loan money to
start-ups and cooperatives in crisis is often the only help
available to these ventures, and it is such gestures that
make the movement stronger and more widespread.
Indeed, it is only as a movement that we can take
advantage of the opportunities that the future presents for
expansion. As a movement, we can achieve the vision of a
co-op in every community in North America.
128
Movement Culture: A set of cultural norms and
expectations based around the concept that cooperativism
is a social and economic movement - one that seeks to
empower and improve the lives of cooperative members
and one that seeks to expand the principles and values of
cooperation to benefit our communities and beyond.


202

Afterword
Building a housing cooperative from the ground up can
never be synthesized into one tangible document. This
guide can never provide a foolproof method, as such a
method does not exist.
For this reason, we strongly encourage you to use this guide
as a jumping off point and explore your own local resources
as best you can. If there are co-ops in your area, go and ask
them about how they got started or if anyone from their
leadership wants to grab a cup of coffee. If nothing else, this
kind of “cooperative networking” can help you build
connections with other local organizers that could be
invaluable down the line.

We sincerely hope that the Organizer’s Handbook has aided
and inspired you as you embark on this journey, and we
hope to hear from you as you get off your feet.

NASCO Development Services Main Office
1100 W Cermak Rd
#514
Chicago, IL 60608
734-663-0889
info@nasco.coop
www.nasco.coop/dev


Appendix
A Brief History of North American
Cooperatives
In Canada and the US, the roots of the cooperative
movement sprang up for similar reasons. Rural electric
co-ops, credit unions, and agricultural co-ops were founded
to meet the needs of populations, particularly rural, which
did not attract investment or where goods and services
were provided at unfair prices. In the early 20th century,
cooperatives in these two countries began to see a need for
national organizations. In the US, cooperatives organized
the Cooperative League of the USA, which later became the
National Cooperative Business Association129 (NCBA). NCBA
provides networking, technical assistance, and development
assistance. One of NCBA’s major contributions has been
lobbying at the national level for cooperatives. For instance,
it lobbied for legislation which made cooperative
incorporation possible and helped pass legislation which
formed the National Cooperative Bank in 1978. Today,
NCBA remains the premier cross-sectoral link among co-ops
in the United States. One recent lobbying success of the
NCBA that you may be aware of as the creation of the
“.coop” web domain, allowing cooperatives to have a
presence on the web that reflects that they use a model that
129
National Cooperative Business Association (NCBA):
NCBA is a major networking and advocy orgaization for all
sorts of cooperatives. https://ncba.coop
204

is not entirely for profit (like a .com) nor entirely
not-for-profit (like a .org).

Canada enjoys an even stronger network of cooperative
support organizations. The Canadian Cooperative
Association (CCA), formed from a merger of the
Cooperative Union of Canada and the Cooperative College
of Canada in 1987, provides educational services to its
member cooperatives and sponsors cooperative
development in Global South nations. The Cooperative
Housing Federation of Canada130 (CHF) provides technical
assistance to developing and established co-ops throughout
English-speaking Canada. Canadian cooperatives have also
benefited from the support of the Canadian Mortgage and
Housing Corporation (CMHC). However, the CMHC has not
provided financing for a student cooperative since the early
1970s, and funding for the program has dropped off sharply
in recent years. Other sources of financing are available,
primarily from within the cooperative movement itself.

The contemporary cooperative movement is strong and
diverse. Cooperatives exist all over Canada and the United
States. Some of the larger cooperatives have an annual
income of several billion dollars. In addition to rural electric
co-ops, credit unions, and agricultural co-ops, there are
cooperatives to serve almost every need: food co-ops,
automotive co-ops, insurance co-ops, housing co-ops,
daycare co-ops, book co-ops... the list goes on.

130
Cooperative Housing Federation of Canada:
https://chfcanada.coop.


Student Cooperatives & NASCO

The beginnings of student cooperatives are unknown, but it
is believed that the first co-ops were bookstores and group
houses that began in the late 1800s. The Harvard “Co-op”
is the best-known example of the early bookstores.
Research by Deborah Altus from 1994 has documented the
existence of women’s housing co-ops during this period.131
These houses, owned and controlled by the university, were
established to provide affordable housing for women. They
were “cooperative” only in that the members shared
responsibilities and ate meals together. Most of the
pre-Depression Era student housing cooperatives were
university owned and operated.

The Great Depression of the 1930's brought many student
cooperatives into existence in both Canada and the United
States. This period of economic hardship encouraged
people to think in new directions and a wave of new co-ops
was started. If one event can be seen as the birthplace of
student cooperative movement it was a lecture by an
internationally-renowned Japanese labor, cooperative, and
peace activist, Toyohiko Kagawa. Kagawa spoke at a
Student Christian Movement conference in Indianapolis,
Indiana. Students from Ann Arbor and Toronto went to this
conference and returned home to start student housing
cooperatives that thrive even today. Other student activists
saw him speak elsewhere and where similarly inspired.
131
"Women in Community Yesterday and Today."
Communities; Journal of Cooperative Living, No. 82 by
Deborah Altus
206

The 1930s also saw the start of other long-standing
cooperative systems including Berkeley, Austin, Los
Angeles, and Eugene. By 1941, about 150 cooperative
housing associations had some 10,000 student members.
An association was formed called the North American
Students Cooperative League132 (NASCL), which survived
into the 1950s. The Second World War deflated much of the
momentum of this period, drafting members for the war. As
most of these co-ops were in rented buildings, most of them
died during the war. The organizations that survived were
usually the ones that had begun to purchase their own
buildings. In the 1950s, new systems in Kingston, Ontario;
Oberlin, Ohio; and Lincoln, Nebraska were established.

However, McCarthyism133 and the public discomfort with
anything that could be branded as “communist” or
“socialist” did not encourage progressive answers to social
problems. No one can tell, with cooperatives or other
progressive movements, to what extent the fear and guilt of
the McCarthy era damaged the chances for revival and
expansion. At any rate, there was little new development of
cooperatives during these years.

132
North American Students Cooperative League: NASCO’s
precursor founded in 1946.
133
McCarthyism: This term was coined in the early 1950s in
response to US Senator Joseph McCarthy’s practice of
blacklisting people as communists, with or without sufficient
evidence.


In the 1960s, the political fervor over the civil rights, free
speech, and anti-war movements brought new enthusiasm
to student communities around the world. This enthusiasm
translated into a keen interest in non-traditional forms of
democracy, such as cooperatives. New cooperatives were
started in places such as Austin, Texas; St. Paul and
Minneapolis, Minnesota; and Providence, Rhode Island,
among others.

Throughout the 1970s, former student activists put their
ideas into action by creating food and other cooperatives
based on the idea of participatory democracy and a healthy
life. This activity translated into what is known as the “New
Wave” cooperative movement, as opposed to the “old
wave” co-ops of the 1930s. Some of these organizations
existed on college campuses but most were integrated into
communities and served community needs. The New Wave
cooperatives, with their emphasis on healthy and organic
foods, were the beginning of the contemporary health food
movement.

In 1968 at a conference sponsored by the Inter-Cooperative
Council at the University of Michigan a proposal was passed
to form an organization to meet the growing needs of the
student cooperatives in Canada and the United States.
Three weeks later, a group gathered in Chicago to organize
the North American Students of Cooperation134 (NASCO),
134
North American Students of Cooperation (NASCO): The
North American Students of Cooperation Organization
organizes and educates affordable Group-equity co-ops and
their members for the purpose of promoting a
community-oriented cooperative movement.
208

based on the NASCL model of the 30s and 40s. During the
1970s, NASCO was composed not just of student
cooperatives but of the new wave co-ops that were popular
in youth circles. The majority of contemporary NASCO
members are student cooperatives, however, in recent
years, many community organizers and co-op alumni have
taken the model used by NASCO member co-ops and
applied it to non-student cooperatives, which have then
become members. NASCO now serves as the voice of a
strong and future-oriented movement.

In the realm of development, an important change that took
place during the late-60s and early-70s was in the area of
federal funding provided by the US and Canadian
governments. Most of the existing student housing
cooperatives took this opportunity to expand rapidly.
However, the late-70s and early-80s were the end of this
period of fantastic growth. Established cooperatives
expanded during this period, but only a few new systems
were started. For this reason, in 1987, NASCO
Development Services135 was founded as a development
partner of NASCO. With the vision of a co-op system on
every campus, NASCO Development Services has
advocated for and assisted student groups.

Student cooperatives are considered to be unique in
relation to the rest of the cooperative movement in many
respects. First, campus cooperatives have higher rates of
135
NASCO Development Services: A subdivision of NASCO
that seeks to support the development of new cooperatives
as they get off their feet and support existing cooperatives
as they continue to operate and expand.


member turnover than most because of the limited time

students attend college. Second, most student cooperatives
have a higher degree of member participation —both in
governance and operations— because of the labor
responsibilities of membership. Third, co-ops often serve
the social needs of their members more intensely, since they
are frequently based upon group houses and/or shared
dining groups.

The existence of organizations whose mission is to educate
and expand the housing cooperative movement has
furthered the general interests of housing cooperatives, and
especially student housing cooperatives. NASCO, NASCO
Development Services, and NASCO Properties136 are three
movement organizations that have been created by and for
the co-ops in Canada and the US. They have provided a
forum to discuss issues affecting member co-ops and an
impetus for assisting organizers in creating new co-ops.
North American Students of Cooperation

NASCO's creation in 1968 meant that student cooperatives
began working together towards their common interests.
NASCO began its work almost immediately on creating
tools to develop more cooperatives. Through a strong
lobbying effort, co-ops were able to get the Department of
136
NASCO Properties: A subdivision of NASCO that helps
new cooperatives finance group equity co-ops.
210

137
Housing & Urban Development to make loans directly to
co-ops.

As part of its goal to serve active member cooperatives,
NASCO developed educational programs to assist co-ops in
educating their own members. After first focusing on
regional conferences, NASCO developed a binational
conference, called the Cooperative Education and Training
Institute (often referred to simply as “NASCO Institute”) to
train co-op members and organizers in the principles and
best practices of cooperation. Other programs were
developed to educate and link NASCO members from
around the US and Canada. Today, NASCO keeps the
Group-equity and student cooperative movement strong
and develops leaders for the future. The services currently
include the following:

● NASCO Institute138: an annual educational
conference attended by 400+ co-op members
● Member Visits: educational workshops and
consultations done on-site at each co-op
● Staff and Managers Conference: an annual
conference of co-op staff and managers to network
137
Department of Housing and Urban Development (HUD):
The HUD provides housing and community development
assistance to ensure compliance with the Fair Housing Act.
138
NASCO Institute: A conference on cooperation hosted
by NASCO each year for training, networking, and learning
new skills. https://nasco.coop/institute


and further professional development at co-op staff

and managers
● Information Services: provides info on cooperatives
to members, media, policy makers, and the general
public
● Internship Network: provides students with
connections to jobs in cooperatives around the
continent
● Action Camp: a week-long retreat for co-op leaders
to confront social inequalities in their co-ops
● Emerging co-op Leaders: an annual conference
bridging different co-op sectors to compare methods
NASCO Development Services

The late eighties and early nineties brought the
development and implementation of a new business plan
for NASCO, which called for increased efforts in maintaining
the growth which our member cooperatives had achieved
through enhancing member services. The plan also called
for increases in development activity and resulted in the
creation of the NASCO Development Services.

NASCO Development Services was founded in 1987 (as the
Campus Cooperative Development Corporation) by NASCO
and its member cooperatives. NASCO Development
Services was created because NASCO found that, due to
limited resources, it could not effectively assist co-op
organizers. The organization encourages and initiates co-op
development on a continuous basis by providing financial
aid, consulting, and comprehensive technical assistance
primarily to student groups looking to establish co-op
212

housing. NASCO Development Services works with
organizing groups on cooperative structural aspects, legal
incorporation, feasibility studies of potential properties,
finding appropriate properties, arranging financing, and
assisting in the design of the organization.

NASCO Development Services is a separate organization
from NASCO, with its own membership, which allows for
special participation in a development effort that is not
perceived as a drain on NASCO’s educational efforts. While
NASCO and NASCO Development Services are different
organizations, there are substantial connections between
the two. First, the memberships in the two organizations
overlap extensively. Second, the organizations consider
themselves to be development partners, meaning that they
coordinate their efforts. Finally, NASCO, NASCO
Development Services, and NASCO Properties all share one
staff and office space.

As a part of their strategy, in 1988, NASCO Development
Services and NASCO incorporated another organization,
NASCO Properties, which provides ownership and
management services for several cooperatives. NASCO
Properties seeks to combat the problem of co-op
organizers’ lack of access to mainstream financial resources.
By showing itself to be a reputable national property owner,
NASCO Properties is able to purchase a property for local
housing cooperatives. A more detailed description of
NASCO Properties can be found in the “Purchasing
Property” chapter.


New Chapters & Features Planned for 5th

Edition:
● The Fair Housing Act and Co-ops
● Providing affordable Housing - and Proving It!
● The NASCO resource library (once you open your
co-op)
● Finding and Keeping Good Members
● Community Awareness of Cooperatives
● Cooperatives as Tools to Combat Gentrification

214

Bibliography
Works Cited
What Is a Co-Op? What Is a Mutual? | Co-Operatives and
Mutuals Canada,
canada.coop/en/programs/co-op-development/incorp
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Canada Revenue Agency. “Business Registration Online –
Eligibility.” Canada.ca, Innovation, Science and
Economic Development Canada, 12 Feb. 2019,
www.canada.ca/en/revenue-agency/services/tax/busin
esses/topics/registering-your-business/bro-eligibility.ht
ml.
Canada, Corporations. “Creating a Not-for-Profit
ME Research and Statistics, Innovation,

Corporation.” S
Science and Economic Development Canada, 18 Oct.
2017,


www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs04970.html.
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Canada, Corporations. “Federal Incorporation.” S
Research and Statistics, Innovation, Science and
Economic Development Canada, 4 July 2016,
Canada, Corporations. “Is Incorporation Right for You?”
SME Research and Statistics, Innovation, Science and
Economic Development Canada, 4 July 2016,
Centre for Equality Rights in Accommodation. “Human
Rights in Housing in Canada: An Advocate’s Guide.”
May 2008,
http://www.equalityrights.org/wp-content/uploads/20
10/04/National-Guide-English-Final.pdf
“Co-Operatives as Charities and Not-for-Profits.” Miller
Thomson LLP,
www.millerthomson.com/en/publications/communique
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s-and-updates/social-impact-newsletter-formerly-the/o
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-and-not-for-profits/?utm_source=Mondaq&utm_medi
um=syndication&utm_campaign=LinkedIn-integra.
“Community Service Co-Ops and Non-Profits – What's the
o-Operatives First, 14 Sept. 2018,

Difference?” C
cooperativesfirst.com/blog/2017/12/19/community-ser
vice-co-ops-and-non-profits-whats-the-difference/.
Sector, Strategy and Innovation Policy. “Information Guide
ME Research and Statistics,

on Co-Operatives.” S
Innovation, Science and Economic Development
Canada, 27 Aug. 2018,
www.ic.gc.ca/eic/site/106.nsf/eng/h_00073.html.
“What Is a Housing Co-Operative?” Settlement.Org |
Information Newcomers Can Trust,
settlement.org/ontario/housing/living-in-ontario/housi
ng-basics/what-is-a-housing-co-operative/.


“Rental Vacancy Rate for the United States.” FRED, 29 Oct.
2019, fred.stlouisfed.org/series/RRVRUSQ156N.
Harris, Richard, and Doris Forrester. “The Suburban Origins
of Redlining: A Canadian Case Study, 1935-54 -
Richard Harris, Doris Forrester, 2003.” SAGE Journals,
1 Jan. 1970,
journals.sagepub.com/doi/10.1080/004209803200014
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Gross, Terry. “A 'Forgotten History' Of How The U.S.
Government Segregated America.” NPR, NPR, 3 May
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www.npr.org/2017/05/03/526655831/a-forgotten-hist
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NASCO Cooperative Organizer’s Handbook: Fourth Edition

Cooperative Ideology 13

Step 2: Develop Tangible Plans 37

Step 3: Create and Fund a Legal Entity 54

The Incorporation Process 57

Step 4: Acquire a Property 81

Development Budget (Sources and Uses of Funds) 121

Step 5: Begin Operating the New Co-op 153

House Management & Labor Systems 180

The Future 189

The Organizer’s Handbook:

Housing cooperatives are a means of providing affordable

issues that are important to their membership. The housing

The Rochdale Principles

First Principle: Voluntary & Open Membership

Second Principle: Democratic Member Control

Third Principle: Member Economic Participation

Fourth Principle: Autonomy & Independence

Fifth Principle: Education, Training & Information

Sixth Principle: Cooperation Among Cooperatives

Seventh Principle: Concern for Community

How to Start a Co-op in Five Easy

Step 1: Create a Shared Vision

Step 2: Develop Tangible Plans

Step 3: Create and Fund a Legal Entity

Step 4: Acquire a Property

Step 5: Begin Operating the New Co-op

Step 1: Creating a Shared Vision

Forming an Organizing Group

assumptions that led them to start a co-op. However, this

neighborhoods populated by students. Dilapidated

Educating the Group

Education About Cooperatives

Education About Property Management

Education about Housing Cooperatives

disagreement. Disagreement is not bad. In fact, it is

Step 2: Develop Tangible Plans

to local affordable housing advocacy groups or municipal

literature about student co-ops for outreach. This literature

How to Find and Get Technical Assistance

Build an Advisory Committee

to contribute. Advisors should support the group’s mission,

● Community leader: to help build a base of support.

● Lawyer: to serve as a legal advisor.

● Architect: to do some drawings for changes to

● Loan officer: to provide assistance in getting loans.

● University staff (if applicable): to serve as a link and

● Co-op staff person: to serve as a point of reference

NASCO Development Services

accounting. They provide trainings to board directors and

Local Housing Organizations

specifics. These people are there to help you understand

State and Provincial Housing Agencies

Step 3: Create and Fund a Legal

Your organizing group may be operating like a co-op at this

If you've started fundraising, you have probably run into the

Corporations can own things and carry debts. This means

responsibility and ownership once the co-op is operating.

Corporations don't need you. That's right, you can walk

Corporations have legal responsibilities and duties. If you

Corporations can sign contracts and hire people. Many

Incorporation is a powerful and galvanizing team building

The Incorporation Process

● Include a Dissolution Clause35

Build in Graphics Here for Each Equity Model